Agricultural Pricing Policies in India: Trends, Issues, and Impacts

Abstract

This dissertation examines the effect of government agricultural policies-specifically Minimum Support Prices (MSP), subsidies, and procurement mechanisms-on agricultural production and product prices in India, specifically on staple crops like wheat and rice. The research seeks to examine how policy tools affect market conduct, farmer revenues, and general agricultural sustainability. On the basis of secondary data from government reports from 2014-15 to 2023-24 and applying statistical procedures such as descriptive analysis, Pearson correlation, and linear regression using SPSS, the study analyzes the effectiveness of policy interventions in influencing price dynamics. The results show a high and statistically significant positive relationship between MSP and market prices of wheat (r = 0.978) and rice (r = 0.984), reaffirming that MSP is a sound price floor that determines market directions. Regression analysis also shows that more than 95% of the price variability in market prices is explained by MSP changes, with each ₹1 rise in MSP leading to a corresponding ≈ ₹2 rise in market prices. But actual gain to farmers depends very much on the extent and efficiency of government procurement activities, which can differ widely over regions and years. The paper further emphasizes that while input subsidies and food procurement support price and income stabilization, this has to be complemented with sustainable action and inclusive policy implementation. In general, the study finds that although MSP and subsidies are still the essential policy instruments, their success depends on complementary procurement infrastructure investment, market access, and region-specific policy customization. The dissertation presents empirical evidence to inform better agricultural price policy and guarantee fair income security to Indian farmers.