Advantages
- Ensures remunerative prices to farmers for their produce.
- Safeguards farmers’ interests.
- Provides a minimum price guarantee, reducing price uncertainty.
- Incentivizes farmers to produce certain crops.
- Helps in food security by encouraging production.
Limitations
- Cost-plus pricing: Ignores demand-supply, domestic/international price trends.
- Inflationary: MSP becomes base price, causing inflation.
- Market Distortions: Affects cropping patterns (farmers grow MSP-supported crops).
- Environmental Issues: Leads to overuse of water, pesticides, fertilizers (e.g., in Punjab/Haryana).
- Limited Procurement: Government procures mostly wheat and rice, mainly from few states.
- Financial Burden: Huge financial burden if government procures all 25 crops.
- Corruption: Leads to corruption in procurement process.
- Deters Private Investment: Restricts free play of markets, deterring private investment.
- Not Legally Backed: Farmers cannot demand it as a legal right.