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The study was undertaken with the focus on Minimum Support Price and its impact on various parameters of agricultural economy including growth parameters, distribution aspects, and decision making in allocation of resources, environmental effects and above all MSP as an effective instrument of the price policy. The study was mainly dependent upon the data collected from secondary sources at the state level and supported with the primary data. The price policy was more effective in case of paddy and wheat as compared to cotton in the Punjab State. Since 1990s, the gap between farm harvest price and MSP in case of paddy narrowed down considerably while for wheat, the farm harvest price was even lower than the MSP for some years. It was due to the reluctance shown by the Government to purchase large volumes of paddy and wheat arriving in different markets of the state due to lower storage capacity and already piled large stocks of food grains. The growth in MSP, wholesale price and farm harvest price for paddy, wheat and cotton was higher in period II (1985-86 to 1999-2000) as compared to period I (1970-71 to 1984-85). The farmers’ response regarding the awareness of MSP was the highest for wheat followed by paddy and cotton. The increase in MSP had induced the use of new technology and increase in output. Also, the impact of MSP in increasing the adoption of technology was found to be negatively associated with farm size. There was no regional disparity observed in procurement of rice, wheat and cotton in the State. All the markets in the state are regulated and no farmer has to travel more than five kilometers to sell the produce. The impact of MSP can be seen through the increased area and production of rice and wheat in the Punjab State since 1985-86. The total cropped area in the state increased at the significant growth rate of 0.66 per cent per annum. The use of nitrogenous fertilizers in the state increased with significant growth rate of 2.52 per cent per annum while phosphoric and potashic fertilizers showed negative growth. The price disadvantage (price actually got versus the prevailing market price) was inversely related with farm size particularly in case of paddy. The farmer's response regarding the adequacy of MSP was nil in case of cotton where as in case of paddy and wheat less than 10 per cent farmers were satisfied with the MSP. The influence of MSP on village market price and main market price was observed to be more in case of wheat followed by paddy and least in case of cotton. Due to the assured minimum support price and effective price policy for paddy and wheat in the state, area under these crops has increased over time. This was at the cost of decrease in area under maize, bajra, pulses and oilseeds for which though, the Government of India announces MSP but price policy for these crops in the state was ineffective due to non- procurement. farmers.

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