The Bold Voice of J&K

Most workable solution could be according legal status to MSP & calculation of C2 cost could be deliberated

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  • Swaminathan Commission (NCF) too pinned Agrarian Distress in no assured immediate remunerative market

  • Why there is need for a legally dedicated Minimum Support Price ( MSP) for Agri Produce in India ?

  • Under present system only Government is obliged to buy Farm Produce on MSP but Trader is Not


One would ask why do farmers sell their agriculture produce/food grains etc below the Minimum Support Price (MSP) notified by government for procurement? Simple answer is government can purchase only buffer stocks and food grains required for public distribution system but needy farmers (over 85 percent of the total community is of landless/marginal farmers/ small farmers having lands less than two hectares) have no choice to hold stocks after harvest so they immediately run to sell their produce, thereby flooding market, and the traders exploit their requirements against cash sales. So there lies all fair cause in Indian conditions to accord a status in law to Minimum Support Price for cereal/ non cereal/ other crops where ever MSP is announced. The next question is how much and how to fix MSP?
Let us have a brief look on the MSPs ( without legal status) fixed over the years: Govt of India has posted on facebook that Paddy MSP was 1310 /qtl in 2013-14 and that has been increased to 2180/ qtl in 2023 24 which is 118 percent increase over 2010 -2011 MSP.
RBI Hand Book on statistics of Indian economy 2023 mentions that governments Direct plus Indirect Tax revenue from 1994 – 1995 to 2022- 2023 has increased from INR 146286 Cr to INR 4551271Cr I,e 31.11 times.(Direct plus Indirect Tax Revenue 1994 1995 to 2022- 2023 budget estimate for Centre from INR 92294 Cr to INR 2751420 Cr and for States from INR 53992 cr to INR 1799851 cr,Total INR 146286 Cr to INR 4551271Cr) whereas MSP s for Paddy increased (MSP Rs 340 per qtl in 1994 -95 increased by 2022-23 to Rs.2040/qtl) 6 times only and MSPs for wheat increased ( Rs 380 to Rs 2125) 5.6 times only.
In the case of legumes or pulses, the MSP increased over 20 times in 33 years (1984-85 to 2016-17).
The MSP per quintal in the case of Urad, Tur & Moong was Rs 275 each in 1984-85 by 2017-18 the MSP for Tur reached Rs 5450 per quintal, Rs 5575 per quintal for Moong and Rs 5400 per quintal for Urad.
In the case of a cash crop like Cotton the MSP per quintal was Rs 535 in 1984-85 and in 2016-17, the MSP increased to Rs 4160 per quintal. The non Agriculturist consumer population may feel disturbed even with this data and contest that increase in the prices of food grains / food items directly affects their budget and many do not get that increase in their earnings (no doubt those who are in fixed income group would contest that with the provision of DA government employees are compensated with increasing prices where as that is not the case with those working in private sector).
Government may like to use the food grain consumer segment’s objections to counter the MSP increase demands when the MSP announced is named low by farming community . But at the same time some may come with the data that the tax income of the government had increased much more over a period like like the disclosures from the Reserve Bank of India’s (RBI) Hand Book of Statistics on Indian Economy for 2016-17 which indicated that the Minimum Support Price (MSP) for Paddy increased just over 10.7 times, from Rs 137 per quintal in 1984-85 to Rs 1470 per quintal in 2016-17. During the same period, the tax revenue of the Government of India increased by even over 50 times ( INR 176.51 Billion to 10887.93 Billion).
Now comes the question of method / procedure for fixation of MSP and acceptance of MSP by the farmer community. Reference of demands for fixation of MSP as per recommendations of The National Commission on Farmers (NCF) under the chairmanship of Professor M.S. Swaminathan are being made these days. With the present system and pricing policy as regards procurement/ purchase of agri produce from farmers MSP is the minimum price at which the government procures crops from farmers. The actual amount for MSP depends on the method used to calculate cost of production (CoP). Fixing MSP based on the Swaminathan report has been a long demand of farmer groups and was a major demand during the year-long farmers’ protest in 2021-22.
Brief on the methods / procedure for cost calculation could be mentioned here for ready reference The Commission for Agricultural Costs & Prices (CACP), suggests MSPs for specific crops on all-India average levels considering cost segments of class A2 (Costs incurred by the farmer in production of a particular crop including inputs such as expenditure on seeds, fertilisers, pesticides, leased-in land, hired labour, machinery and fuel , Class A2+ FL ( A2 + the value of family labour and Class C2 (A2 + the value of family labour+ imputed rental value of owned land plus interest on fixed capital, rent paid for leased-in land ).Demands are for fixing MSP as C2 plus 50 percent on C2.
Ministry of Agriculture & Farmers Welfare Post of 24 MAR 2023 4:42PM by PIB Delhi as regards fixing of Minimum Support Price (MSP) said < i. Government has increased the MSP for all mandated Kharif, Rabi and other commercial crops with a return of at least 50 per cent over all India weighted average cost of production from 2018-19. ii. MSP for Paddy (common) has increased to Rs 2040 per quintal in 2022-23 from Rs 1310 per quintal in 2013-14. iii. MSP for Wheat increased from Rs 1400 per quintal in 2013-14 to Rs 2125 per quintal in 2022-23>. Some people have said that MSP for wheat etc is not fixed as C2 plus 50 percent.
This question could be left for answer by Government since government has to consider the effect of MSP on the consumers also and that too when in a country like India a very large population is in low income group , belongs to non agri families, belongs to farm labour. If we go by the reports received about distress sales by the needy farmers, who mostly are landless cultivators, and those belonging to small & marginal farmer category< who constitute more than 85 to 87 percent of the farmer community> the distress sales have been at occasions at 70 percent ( even lower ) of the announced MSP , so in case even the MSP that some people say is less is ensured by law to farmers that too will be of great benefit worth improving the economic condition.
So all efforts need be made to settle the issues of farmers without losing more time and without allowing some people to drag the issue in political games. The most workable immediate solution could be giving legal status to MSP announced by Government and as regards calculating C2 cost the objections that some may have could be deliberated. The trade if does not purchase at MSP let the government buy , the food grains will be needed for consumption , and when government sells the produce in the market the money will come back. But the traders cannot afford to stop total purchase since then they would be jobless, so government need not worry. May be even the numbers to be supported by Rs.6000 per year too will come down.
(The author is a Sr Journalist and Social Activist).

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