MSP hike

Sir,
MSP is a form of market intervention by the Government to insure agricultural producers against any sharp fall in farm prices. The MSP is announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). MSP is the price fixed to protect the producer – farmers – against excessive fall in price during bumper production years. It is a guarantee price for their produce.
Amid farmers’ unrest in many parts of the country, the demand for an increase in MSP has been voiced regularly. The manner in which the MSP is used makes it clear that it is no more an instrument to improve the financial condition of farmers, but to boost the image of the ruling party.
MSP has, in fact, lost much of its financial relevance as it failed to serve the interest of the farmers. Questions are also being raised about the efficacy of MSP in serving all types of farmers. The beneficiary quotient has been the primary factor in assessing the impact and the utility of the MSP.
Until the input cost of agriculture is reduced and there is an effective law to control traders, farmers are not going to get any benefit with such a hike in MSP. Traders will continue to buy the crop at mandis much below the MSP. Besides the elements such as hike in the labour wages by Rs 1,200 to 1,500 per acre, GST of 18% on machinery and farm implements and 12% on fertilisers, and rise in diesel prices have made the life of farmers even more difficult.
Economists have already expressed apprehensions that this could cost the exchequer an additional Rs 15,000 crore and would wreck government finances, stoking inflation. They argue that the promised doubling of farmer incomes is not possible unless the number of farmers is reduced. Intriguingly, the government has been working towards this agenda.
It is an open secret that loan waivers and increased MSP provide only temporary relief to farmers. The current crisis in India’s farm sector is perhaps the worst in the last 15-odd years. The agrarian distress was underlined by the finding that as many as 64% of farmers would like to leave agriculture and move to a city if they were offered a job there. This percentage was slightly higher than the 62% that a State of Indian Farmers Survey reported in 2013 for the same question. However, the big difference from the 2013 survey was that as many as 60% of farmer respondents in the current survey said they would not like their children to take up farming as the source of livelihood.
Arun Srivastava
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