MSP proposal

A panel of Union ministers proposed the purchase of pulses (tur, urad and masoor), maize and cotton crops by government agencies at the minimum support price (MSP) for a five-year period after entering into an agreement with farmers. The offer was made during the fourth round of talks between the Centre’s representatives and farmer leaders, who have rejected it as they want a legal guarantee for procurement at the MSP for various crops.

The government has tried in vain to pacify the protesting farmers, who have upped the ante in the run-up to the Lok Sabha elections. The proposal betrays the ground reality: the MSP regime and assured procurement have largely remained confined to wheat and paddy. Year after year, the government has been upwardly revising the MSP for over 20 crops — including wheat, paddy, pulses, maize and cotton — on the basis of recommendations of the Commission for Agricultural Costs and Prices. However, farm unions have repeatedly rejected the ‘paltry’ hike, even as farmers suffer losses whenever their produce fetches prices below the MSP.

In 2015, the Shanta Kumar-led High-Level Committee on Restructuring of FCI had urged the government to revisit the MSP policy. The panel had said: ‘Effectively, price support operates primarily in wheat and paddy and that too in selected states. This creates highly skewed incentive structures in favour of wheat and paddy.’ The committee had noted that wheat-paddy procurement did not directly benefit more than 6 per cent of India’s agricultural households. Indeed, this lopsided system continues to hamper crop diversification, besides leaving the majority of the nation’s farmers at the mercy of unscrupulous market forces. The government’s MSP plan for five crops was a non-starter in the absence of a robust system for guaranteed nationwide procurement. The larger objectives of enhancing food security, increasing farmers’ income and reducing dependence on imports can be achieved if the glaring anomalies in the MSP regime are removed.