Agricultural Price Policy and its Implementation in India: Basic Objectives

Agricultural price policy is one of the most important instruments for economic management of a country, particularly for agrarian economies. It seeks to balance the interests of farmers, consumers and the wider economy. Agricultural price policy aims to achieve several goals such as ensuring adequate returns for farmers, stabilizing food prices for consumers, and promoting productivity and sustainability in agriculture.

Key Objectives of Agricultural Price Policy in India. It aims, first, to deliver a price to farmers that will pay them to produce more, and to improve the quality of what they produce. This is essential for improving farmers’ livelihoods and ensuring food security. This is done by way of the Minimum Support Price (MSP) mechanism, which ensures a certain minimum price at which the government buys certain crops (mainly cereals, especially rice and wheat, but also including pulses, oilseeds, and other goods).

Next, the aim one is price stability in the market and fundamental food items are available for people at reasonable prices. Especially as it is a massive, diverse country with a broadly distributed income level. In this regard, the Public Distribution System (PDS), which supplies subsidised food grains to the below-poverty-line households, is an important measure.

Thirdly, the policy supports agricultural productivity and sustainability as it encourages the adoption of modern farming techniques, like seeds, fertilizers, irrigation. The government gives input subsidy for these to minimize cost of production for farmers.

Despite these measures, the agricultural price policy in India suffers from several persisting shortcomings, such as procurement inefficiencies, market infrastructure deficits, and the demand for more efficacious price discovery processes. Over the years, however, the scheme has faced a number of challenges, including allegations of leakages and inefficiencies in the disbursal process.