Instability Analysis of MSP and FHP for Gram in Telangana: Trends and Policy Insights

Praveen Kumar Chetti and K. V. Babu Giri

Indian Journal of Agricultural Marketing, 2025, vol. 39, issue 3

Abstract: The agricultural sector in India plays a pivotal role in ensuring food security and rural livelihood, with pulses being an essential component of both diet and crop rotation systems. Among pulses, Gram occupies a prominent position in Telangana due to its adaptability and market demand. However, price instability and the gap between Minimum Support Price and Farm Harvest Price have posed challenges for farmers, affecting their income and marketing decisions. Despite periodic upward revisions in MSP by the Government of India to ensure remunerative prices to farmers, ground realities often reveal a mismatch between MSP and actual market realization (FHP). This discrepancy, along with price volatility, undermines the policy's effectiveness, particularly for small and marginal farmers. The primary objective of this study is to analyze the trends, growth patterns, and price instability of Minimum Support Price (MSP) and Farm Harvest Price (FHP) for Gram in Telangana over the period from 2014-15 to 2023-24. By examining the historical movement and volatility of these two price indicators, the study seeks to to suggest policy recommendations based on empirical findings. The study adopts a secondary data-based analytical approach, using MSP and FHP data. Analytical tools such as compound annual growth rate and the Cuddy-Della Valle Instability Index are employed to evaluate trends and instability. The CAGR for MSP and FHP stood at 6.16% and 6.36% respectively, indicating moderate growth. FHP showed higher price fluctuations (CV = 14.06%) compared to MSP (CV = 16.37%). The instability index for FHP (10.19%) was significantly higher than that for MSP (3.93%), suggesting greater volatility in market prices. In several years, FHP was below MSP, pointing to weak enforcement and ineffective procurement operations. Strengthen procurement mechanisms at MSP, promote Farmer Producer Organizations (FPOs), improve price forecasting infrastructure, and enhance digital market access to reduce volatility and ensure fair price realization. The study underscores the urgent need for robust policy interventions to stabilize Gram prices in Telangana and align market mechanisms with MSP objectives, thereby safeguarding farmer interests and enhancing marketing efficiency.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:injagm:400111

DOI: 10.22004/ag.econ.400111

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