Chief Economic Advisor (CEA) Arvind Subramanian has suggested phasing out of Minimum Support Price (MSP) on foodgrains for farmers. He pointed that MSP originally came into being because we had a big problem of lack of self-sufficiency in foodgrain production, but we no longer have the scarcity of foodgrains, cereals, etc and hence such policies should not continue forever and there should be an expiry date to it.
MSP is fixed by the government to protect the producer against excessive fall in price during bumper production years. Subramanian said that it was aimed to provide incentives to farmers and now it has been successful, adding that MSP policy not only favours cereals, but de-facto favours cereal producing regions. It widens regions disparity.
Further he said that there is a way to rectify it and that is get rid of the MSP, to neutralize incentives across crops, and provide these incentives through other means like technological research, etc. However, he admitted that it is a difficult job to get rid of this, given the politics in India.