In agricultural policy, income support refers to direct payments made to farmers that are not dependent on production volume or current market prices. These payments can either be a fixed amount per acre or calculated based on historical yields.
In contrast, price support encompasses mechanisms like the Minimum Support Price (MSP), which guarantees a minimum price for farm produce, thereby directly influencing market prices.
The BBY is an innovative price deficiency payment scheme introduced in Haryana, India. Its primary aim is to protect farmers from the volatility of market prices. Under this scheme, if the sale price of a crop falls below the MSP, the government compensates the farmer for the difference. This mechanism ensures that farmers do not incur losses due to price drops while allowing market operations to continue without direct government intervention in procurement.
The performance of the BBY scheme has varied across different crops. For example, in the case of Bajra and Mustard, the financial support has been adjusted in response to market conditions and actual sale prices achieved by farmers. Conversely, for Sunflower, the support has seen an increase, indicating a broader gap between market prices and the MSP.
Price deficiency payment schemes, such as BBY, are viewed as more market-friendly compared to traditional MSP procurement. They facilitate a dynamic response to market fluctuations, supporting farmers' incomes without causing overproduction or market distortions that can arise from guaranteed MSP purchases.
The discussion surrounding the guarantee of MSP focuses on the potential establishment of a legal framework that would ensure farmers receive a minimum price for their crops. While this approach could enhance income security for farmers, it also poses significant fiscal challenges and risks market distortions due to government involvement.
The landscape of agricultural policy is constantly evolving to strike a balance between supporting farmers' livelihoods and ensuring market efficiency. Initiatives like the BBY represent efforts to reconcile these objectives by providing targeted support that aligns with market dynamics.
Q1. What is the main difference between income support and price support?
Answer: Income support provides direct payments to farmers regardless of production levels, while price support guarantees a minimum price for crops, influencing market prices directly.
Q2. How does the Bhavantar Bharpai Yojana work?
Answer: The BBY compensates farmers when market prices drop below the Minimum Support Price, ensuring they do not suffer financial losses from price volatility.
Q3. What crops have shown varied impacts under the BBY scheme?
Answer: The BBY scheme has had different effects on crops like Bajra, Mustard, and Sunflower, with support levels adjusting based on market conditions and prices.
Q4. Why are price deficiency payments considered market-friendly?
Answer: They allow for a flexible response to market conditions, supporting farmers while avoiding the excess production and distortions associated with guaranteed price procurement.
Q5. What are the potential risks of guaranteeing MSP?
Answer: Guaranteeing MSP may provide income security for farmers but could lead to significant fiscal implications and market distortions due to government intervention.
Question 1: What does income support in agriculture mean?
A) Payments based on current market prices
B) Direct payments to farmers regardless of production
C) Payment for excess production
D) Government procurement of crops
Correct Answer: B
Question 2: What is the primary purpose of the Bhavantar Bharpai Yojana?
A) To increase crop production
B) To provide subsidies for fertilizers
C) To compensate farmers for price drops
D) To guarantee fixed prices for all crops
Correct Answer: C
Question 3: Which of the following is a mechanism of price support?
A) Direct cash transfers
B) Minimum Support Price (MSP)
C) Crop insurance
D) Land grants
Correct Answer: B
Question 4: How does the BBY scheme impact market dynamics?
A) It eliminates all market risks
B) It allows for government procurement at any price
C) It compensates for price volatility without direct procurement
D) It mandates fixed prices for all farmers
Correct Answer: C
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