MSP GUARANTEE CHALLENGES Vs PROTESTS

MSP POLITICS Vs REALITY:

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The news: Farmers have marched to national capital in support of their demands from western Uttar Pradesh, Haryana & Punjab.

Among a large number of demands important one’s are:

MSP: Enactment of a law guaranteeing MSP for all crops. When they agreed to withdraw their agitation against the now-repealed farm laws in 2021, the farmers set MSP enactment as a condition.

Debt waiver: Implementation of Swaminathan Commission’s recommendations to provide debt waivers.

State of India’s farm sector:

With world’s largest food production, largest area under cultivation and largest numbers of heads engaged in this activity, Indian agriculture is a monolith, but,

• Most of the farmers are poor & landless, productivity is one of the lowest in the world, because of lack of mechanization and small size of farms.
• It is not a surprise that more than 3,00,000 farmers committed suicide because of crop failures. Most prosperous Punjab experienced large number of suicides.
• supported food supply, known as PDS is needed more in villages than in cities, which explains the Farm sector crisis.
• According to various surveys, farmers earn more from non-farm activities than farm activities.

MSP need vs the burden:

The procurement of foodgrain has increased from 76 million metric tonnes in 2014-15 to 106 million metric tonnes  in 2022-23, benefitting more than 1.6 crore farmers. The expenditure incurred (at MSP values) on procurement of foodgrains increased from 1.06 lakh crores to 2.28 lakh crores, during the same period.

 

Who benefits from MSP the most?

Out of total expenditure incurred (at MSP values) on procurement of foodgrains farmers of Punjab and Haryana accounted for more than 80% of MSP outgo, but they account for about 25% of overall India’s farm produce.

How important is MSP?

MSP sets the tune for general market prices, thereby making certain crops attractive to farmers and thereby assuring food security, in turn leading to,

• Higher production much more than consumption needs.
• has to buy which it does not need for PDS,
• Neither can it export since prices are more than global prices.
• Spending unnecessarily on storage.

 

Why govt. cannot guarantee MSP immediately?

If farmers demands are met that would incur a cost of 8 lakh crores, about 4 times the present outgo & 20% of overall annual budget of 2022-23. It will be a huge fiscal burden.

 

Why guaranteeing MSP for crops other than wheat & rice with volume caps gradually can be a solution?

Wheat & rice being water intensive crops has created ecological disaster via high fertilizer use & desertification, falling water tables & farmer suicides.

 

Why govt. is adamant in 2024 as against 2021 when it compromised?

Post 2021, electorally most important state Uttar Pradesh convinced the govt. that concerns of farmers of Punjab and Haryana are not shared by farmers of other states & moreover govt. is slowly moving away from Electricity, MSP, Fertilizer, etc. subsidy to Direct benefit transfers(DBTs), which would be more equitable & allow farmers to choose their own crops, thereby aligning production to market demand.