Punjab gov has made purchase of wheat and paddy below MSP illegal; a jail term up to 3 years for buying at a price lower than MSP. This is clearly a political move. While it is debatable if the move is legal, the possible effects of this are: @businessline @srirags @lokeshwarri

1.Private trade will completely stop buying in Punjab and move to other states.

If traders are forced to buy at a price higher than market, they will sell higher than market, and if they so do, who will buy from them? If NAFED or FCI does this, govt. backs them up, but if private trade buys high and sells low they will only go bankrupt

3.Will increase stock of paddy and wheat with government and push market prices lower
4.More farmers will start sowing paddy and wheat because of assured returns

5.Monoculture will harm soil, make crops vulnerable to pest attack
6.Further depletion in groundwater; already groundwater is at a precarious level in Punjab