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  Business   Economy  16 Feb 2017  MSPs should have an expiry date, says Subramanian

MSPs should have an expiry date, says Subramanian

Published : Feb 16, 2017, 1:07 pm IST
Updated : Feb 16, 2017, 1:08 pm IST

Chief economic adviser says problem of lack of self-sufficiency in foodgrain production gave birth to MSP.

Chief economic adviser Arvind Subramanian.
 Chief economic adviser Arvind Subramanian.

New Delhi: Chief Economic Advisor (CEA) Arvind Subramanian today took the line that the minimum support price on foodgrains for farmers should not continue forever and there should be an "expiry date".

"Minimum support price (MSP) originally came into being because we had a big problem of lack of self-sufficiency in foodgrain production. It (MSP) was used as means of providing incentives to farmers. It has been successful. We no longer have the scarcity of foodgrains, cereals, etc," Subramanian said at an event here.

"But the problem with all these things are (although) many of these things work, they should not remain forever. There must be expiry date." Subramanian, an on-leave senior fellow at the Peterson Institute for International Economics, further said, " MSP policy not only favours cereals, but de-facto favours cereal producing regions. It widens regions disparity."

According to the CEA, one way to get rid of MSP is to neutralise incentives across crops and provide these through other means, technological research and the like. He, however, admitted that it is a difficult job, given the politics in India.

"...expiry dates are very difficult," Subramanian said.

Tags: arvind subramanian, msp, minimum support price, foodgrains, farmers, cea
Location: India, Delhi, New Delhi