Which one of the following factors is not considered in deter- mining the Minimum Support Price (MSP) in India?

The Commission for Agricultural Costs and Prices (CACP) determines the Minimum Support Price (MSP) based on several economic factors. Key determinants include the cost of production (A2, A2+FL, and C2), demand and supply dynamics, and price trends in both domestic and international markets [2]. Additionally, the CACP considers inter-crop price parity to prevent cropping pattern distortions, terms of trade between agricultural and non-agricultural sectors, and the likely impact on consumers and the general price level [1]. While the CACP evaluates the 'effect on cost of living' as a macro-economic implication of price policy, a specific 'Cost of Living Index' (typically used for dearness allowance for salaried employees) is not a standard primary factor used to calculate the MSP for crops. Instead, the focus remains on production costs, market parity, and ensuring a minimum 50% margin over the cost of production [2].

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.3 Minimum Support Price (MSP) > p. 305
2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Objectives of MSP include: > p. 329