Minimum Support Price (MSP) Mechanics

Procurement at MSP by government agencies like FCI is not truly unlimited for all notified crops everywhere; infrastructure limits and policy caps (like under PM-AASHA for oilseeds) constrain actual procurement volumes (Statement 1 is incorrect). The MSP acts as a floor price to prevent distress sales. It is entirely possible, and sometimes common during shortages, for open market prices of cereals and pulses to rise well above the MSP (Statement 2 is incorrect). > One-line conceptual takeaway: MSP is a protective price floor, not an upper ceiling, and actual procurement is constrained by state capacity. Answer: (d).