MSP, APMC & Procurement — Set 9

Correct Answer: B. Prevent excessive export to protect domestic supply and moderate prices

The Minimum Export Price (MEP) is the floor price below which export of a specific agricultural commodity is not allowed. It is used to prevent excessive outflow of a commodity when domestic prices are already high or supply is tight. For example, the government has imposed MEP on onion and rice during periods of domestic shortage. MEP helps in moderating domestic food inflation.

Correct Answer: B. Onion

Onion has seen frequent export bans, MEP, and stock limits due to extreme domestic price volatility. India is the world's largest onion exporter but also faces steep price spikes during production shortfalls. States like Maharashtra and Karnataka are major onion producers. The Price Stabilization Fund (PSF) and NAFED's buffer stocking have been used specifically to manage onion price volatility.

Correct Answer: C. Directorate of Marketing and Inspection

The Directorate of Marketing and Inspection (DMI) under the Ministry of Agriculture coordinates agricultural marketing across states. It operates AGMARKNET, enforces grading and standardization norms, and advises states on APMC reforms. DMI also trains APMC functionaries and monitors the implementation of market reforms. It plays a connecting role between central policies and state-level implementation.

Correct Answer: B. It is the floor below which government will not let prices fall by intervening

The 'minimum' in MSP means it is a floor price — the government signals that prices will not be allowed to fall below this level by standing ready to procure at MSP through its agencies. It does not mean this is the maximum price farmers will receive; market prices can and do go above MSP when demand is strong. MSP gives farmers a safety net without capping their upside. The effectiveness depends on actual government procurement readiness.

Correct Answer: C. Insurance companies through bidding

Under PMFBY, insurance companies quote actuarial premium rates through a competitive bidding process organized by state governments. The difference between the actuarial premium rate and the farmer share (2% for Kharif) is the government's premium subsidy, shared equally between Centre and state. High actuarial rates in some districts led to controversy about insurance company profits at government expense. Several states have opted out of PMFBY.

Correct Answer: C. 2016

Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched in January 2016 replacing the National Agricultural Insurance Scheme (NAIS) and Modified NAIS. It provides comprehensive crop insurance against natural calamities, pests, and diseases. PMFBY has been the world's largest crop insurance scheme by farmer enrollment. It was later made voluntary for farmers from 2020 onwards.

Correct Answer: B. Area-based average yield approach using CCE data

PMFBY uses the area-based approach where claims are based on the average yield of a defined area (usually a taluka or revenue circle) compared to the threshold yield. Crop Cutting Experiments (CCEs) are used to estimate actual yields. If the average yield falls below the threshold yield, all insured farmers in that area are eligible for claims. This avoids expensive individual loss assessments.

Correct Answer: B. Farmers must notify crop loss within 72 hours of an event

Under PMFBY, farmers must intimate crop loss to insurance companies, banks, or state agriculture departments within 72 hours of a loss event (flood, fire, disease). Timely intimation is required for claim processing. This applies to mid-season and post-harvest localized losses. The provision ensures insurance companies can investigate losses promptly.

Correct Answer: C. Micro-irrigation including drip and sprinkler systems

The 'Per Drop More Crop' component of PMKSY focuses on promoting micro-irrigation technologies like drip irrigation and sprinkler irrigation. These technologies significantly reduce water usage compared to flood irrigation. The government provides 55% subsidy to small and marginal farmers for micro-irrigation installation. National Mission on Micro Irrigation coordinates with PMKSY for implementation.

Correct Answer: B. Bring uncovered agricultural land under assured irrigation

'Har Khet Ko Pani' (water to every farm) is the component of PMKSY that focuses on creating new irrigation infrastructure and completing long-pending irrigation projects to bring more land under assured irrigation. Accelerated Irrigation Benefits Programme (AIBP) was merged into PMKSY to fast-track completion of major and medium irrigation projects. The goal is to achieve sustainable irrigation across India.