Posted in Indian Economy

Market Intervention Scheme

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Market Intervention Scheme

The Market Intervention Scheme (MIS) is similar to MSP, which is implemented on the request of state governments for procurement of perishable and horticultural commodities in the event of fall in market prices. The scheme is implemented when there is at least a 10 percent increase in production or a 10 percent decrease in the ruling rates over the previous normal year. Proposal of MIS is approved on the specific request of the state/UT governments if the states/UTs are ready to bear 50 percent loss (25 percent in case of North- Eastern states) incurred on its implementation.

Procurement Prices

In 1966–67, the Government of India announced a ‘procurement price’ for wheat, a bit higher than its MSP (the purpose being security of food procurement for requirement of the PDS). The MSP was announced before sowing, while the procurement price was announced before harvesting—the purpose was to encourage farmers to sell a bit more and get encouraged to produce more. But this increased price hardly served the purpose as a suitable incentive to farmers. It would have been better had it been announced before sowing and not after harvesting. That is why since the fiscal 1968–69 the government announced only the MSP, which is also considered the effective procurement price.

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