How Efficient is the Price Support Scheme (PSS) for Pulses, Oilseeds, Cotton and Copra?

Brajesh Jha ()
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Brajesh Jha: Institute of Economic Growth, Delhi

No 379, IEG Working Papers from Institute of Economic Growth

Abstract: In India price-support system is necessary on various accounts. Experience, however, suggests that minimum support prices (MSP) announced for 22 commodities are less defended for pulses, oilseeds, cotton and copra. Price support scheme (PSS) is often criticised as it is believed to crowd out private trade, it is associated with high social cost, and strengthens commodity price subsidy. To create evidence on the above, the PSS for noncereals is evaluated with secondary information from the concerned Ministry and procurement agency. The study found that the B-C ratios of PSS operation for a bulk of noncereals was more than one in the most of the reference years. The efficiency decreased in certain years when the international price of the commodity was low and the domestic market was less insulated. A comparison of PSS operation of non-cereals with cereals reported elsewhere showed that the former was more efficient than the latter. Available information did not support that PSS operation for non-cereals crowd out private trade in that commodity.

Keywords: Price support scheme; Minimum support price; B-C ratios; Crop insurance programmes. (search for similar items in EconPapers)
Pages: 36 pages
Date: 2019
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Published as Institute of Economic Growth, Delhi, 2019, pages 1-36

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Persistent link: https://EconPapers.repec.org/RePEc:awe:wpaper:379

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