Impact of Minimum Support Price Policy Intervention on Crop Diversification: A Case Study of Punjab: 25107
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https://doi.org/10.35716/IJED-25107
Author: Kamal Dev1 and Vinod Naik
Author Address: Department of Economics, Central University of Himachal Pradesh, Sapt-Sindhu Parisar-I, Dehra-177101, District Kangra (Himachal Pradesh)
Abstract
The MSP policy aims to
protect farmers from market volatility and encourage the adoption of modern
agricultural practices to enhance production and productivity. The study
examined the impact of MSP interventions on crop diversification in the Indian
state of Punjab. Data were collected from 320 farmers, which included both MSP
participants and non-participants. The results showed that only 43.75 per cent
of farmers benefited from the MSP policy. The PSM results revealed a
significantly negative impact of MSP on crop diversification, indicating that
the policy may discourage diversification in the region. Rosenbaum’s
sensitivity analysis further confirmed the robustness of the PSM results to
potential hidden bias, indicating that the estimated treatment effect remained
stable even at higher sensitivity parameters. These findings offered policymakers
valuable insights for promoting sustainable agricultural practices. The study
recommended expanding the scope of the MSP policy to encourage crop
diversification and improve overall farmers’ welfare.
Keywords
Agricultural
diversification, agricultural sustainability, farm income, paddy–wheat system, price
support policy
JEL Codes
O13, Q12,
Q15, Q16, Q18.