Monday, February 6, 2023
HomeIndiaMSP, subsidies are at root of Punjab's farm crises but its farmers...

MSP, subsidies are at root of Punjab’s farm crises but its farmers are fighting to keep them

Agriculture experts & some farmers say combination of assured procurement, free power & input subsidies has led to vicious paddy-wheat cycle that needs to be broken.

Text Size:

Bathinda: It has been nearly a month and a half since farmers, a majority of them from Punjab, have been sitting on the outskirts of national capital New Delhi, demanding a repeal of the Narendra Modi government’s three new farm laws, and also objecting to two other pieces of legislation on electricity consumption and the practice of stubble burning.

The farmers’ demand is for a status quo. They want the government to continue paying them a minimum support price (MSP) and procuring all of their rice and wheat produce, and also demand that the facility of free electricity and subsidies on other inputs such as chemicals and fertilisers and machinery remains as it is. The farmers are concerned that if, according to one of the new farm laws, the government allows sale of their produce outside the designated Agricultural Produce Marketing Committee (APMC) areas, it will impact the assured procurement of their produce at MSP at the mandis.

However, agricultural experts say the guaranteed procurement or MSP regime, as well as the free electricity and input subsidies, are the very reasons why Punjab has been facing an agrarian distress for the last decade or so. They say the existing rules and practices have trapped farmers in a vicious circle of paddy-wheat cultivation, which has depleted the state’s groundwater resources, reduced the quality of soil and trapped the farmers in a cycle of debt.

Also read: Wedding planning, feeding buffaloes, farm work — neighbours step in as Punjab farmers protest

Punjab’s agrarian distress

Between 1972 and 1985-86, India’s agricultural growth rate was 2.3 per cent, but Punjab’s was 5.7 per cent. Punjab hit a decline over the next two decades, and while India’s growth rate climbed to 2.94 per cent between 1986-87 and 2004-05, that of Punjab declined to 3 per cent, and then went down further to 1.61 per cent between 2005-06 and 2014-15.

In 1975-76, agriculture’s share in Punjab’s GDP was 60.2 per cent. By 2015-16, the figure had fallen to 23.5 per cent. However, the workforce engaged in agriculture fell disproportionately — from 62.7 lakh in 1975-76 to 35.6 lakh in 2015-16.

These figures show disguised underemployment and lower returns from agriculture, which affects Punjab heavily because 90 per cent of the average monthly income of the state’s households comes from agriculture, as against the national average of 52 per cent, according to a 2020 report by Punjab Agricultural University (PAU), titled ‘Punjab agricultural statistics’, accessed by ThePrint.

The biggest problem, experts say, is the paddy-wheat monoculture, under which farmers are only incentivised to produce rice and wheat, which is not Punjab’s traditional crop cycle. Because of this, farmers have had to draw out more and more groundwater, use more chemicals, and take more loans. Now, as landholdings have become smaller over the generations and the cost of living has increased, the farmers are caught in a debt trap, forced to keep growing wheat and paddy, which in turn is damaging the natural resources of the state.

A senior official in Punjab’s agriculture ministry, who wished to remain anonymous, told ThePrint: “Paddy is the immediate threat to Punjab agriculture. The subsidies given for paddy make it impossible for the state government to invest in promotion of crops other than wheat and paddy.”

According to S.S. Johl, noted agronomist and former vice-chancellor of PAU, if the current system continues, the land of five rivers could face desertification within 10 years or so.

“The water table in Punjab is falling 25-30 cm per year. Drinkable water is now found at a depth of 350 feet. Punjab is heading toward desertification in one or two decades,” Johl said.

“There is severe water pollution in Punjab as it is the biggest user of chemical inputs such as pesticides, fertilisers and insecticides in the country. Water table recharge from farms further pollutes underground water, making it unfit for drinking,” he added.

Also read: Why the farmers’ protest is led by Sikhs of Punjab

The problem of groundwater and free electricity

The area under wheat and paddy in Punjab in 1960-61 was 14 lakh hectares (LHA) and 2.27 LHA, respectively, which increased to 35.08 LHA and 29.20 LHA, respectively, by 2019-20.

Paddy crop consumes 5,377 litres of water per kilogram of produce, compared to 1,500 litres for wheat. So, due to the paddy-wheat monoculture, Punjab’s farmers are over-exploiting groundwater resources through more than 14 lakh tubewells, which irrigate two-thirds of the state’s cultivated area.

According to a 2017 Central Ground Water Board report, the levels in Punjab in the pre-monsoon period of 2017 fell to 22.77 metres, compared to 20 metres in 2007, while the national average was 5-10 metres. Out of Punjab’s 137 blocks, as many as 110 come under the ‘over-exploited’ category.

The tubewell problem has been compounded because Punjab, since 1997-98, has provided free electricity to farmers. The lower the groundwater levels have fallen, the more farmers have had to install bigger, more expensive tubewells to continue to pull out water to supply the paddy and wheat crops. This is why free electricity, combined with MSP assurance, has forced the farmers’ hand towards more and more paddy cultivation.

According to an estimate, every farming household in Punjab that has a tubewell gets at least Rs 45,000 annually from the state government, on account of free power.

“Despite having the Ghaggar river near us, the water level has gone down to 350-500 feet,” said Amit Singh, sarpanch of Andana village in Sangrur. “People still cultivate paddy-wheat, as other crops give hardly any returns in comparison. If one sees their neighbour running a tubewell on free electricity 24/7, why will others invest in cotton with a new machine, labour and input costs?”

Gurmehar Singh, a farmer at Bajak village in Bathinda, also said he was forced to return to paddy and wheat, despite the declining water table and soil losing fertility.

“The water level in our village is 200-250 feet, but as crop returns and soil fertility have dropped drastically, we have to cultivate paddy-wheat though it consumes a lot of water. We have no option but to take more loans to install submersible pumps,” he said.

Graphic: Ramandeep Kaur/ThePrint
Graphic: Ramandeep Kaur/ThePrint

The larger number of tubewells, as well as their bigger size, has also resulted in increased electricity consumption, and the cost of the free electricity scheme to the state exchequer has risen from Rs 2,679 crore in 2010-11 to Rs 5,670 crore in 2018-19.

The proposed Electricity Amendment Bill 2020 seeks to move away from this practice and towards rationalisation of power consumption, by giving farmers a certain amount of money or free power allocation to use, after which they will have to pay for further usage.

According to Johl, the crisis can be averted by charging for electricity for a specific acreage. “Marginal and small landholders can be given free electricity while the medium and large landholders should be made to pay the right price for it,” he said.

“Another solution can be electricity rationing, wherein each farmer should be given a set number of units of power monthly, and excess power consumption should be charged on a per-unit basis,” the expert added.

Also read: From debt to unemployment, Punjab’s entire economy needs reform, not just agriculture

Chemicals and fertilisers harming soil quality

Other than free electricity, the subsidy on fertilisers, with high use of cheap urea and the resultant decrease in soil fertility, has aggravated the crisis and raised input costs.

Part of the reason for this is that paddy, in addition to being more water-intensive, uses more chemical input as compared to wheat. This has led to Punjab consuming more than 10 per cent of the national farm chemical input. The state has encouraged the use of chemical fertilisers through subsidies, which added up to Rs 7,022 crore in 2012-13. The total electricity and fertiliser subsidy in state stands in excess of Rs 13,275 crore.

Graphic: Ramandeep Kaur/ThePrint
Graphic: Ramandeep Kaur/ThePrint

In 2018, fertiliser consumption in Punjab stood at 232 kg per hectare, against the national average of 133 kg per hectare. In Punjab, the usage of NPK, a major farm fertiliser, stands at 1,819 thousand tonnes in 2018-19, as against 1,698 thousand tonnes in 2007-08.

This excessive use of chemicals has led to a fall in the nutrient holding capacity of the soil, which farmers then counter by pumping in more cheap subsidised chemical inputs.

Also read: How Bihar recorded growth but Punjab lagged behind and why farm reforms are important

The MSP regime

Farmers in Punjab get MSP of about Rs 60,000 crore annually, of which Rs 35,000 crore is the MSP on paddy and about Rs 25,000 crore is that on wheat.

The food procurement policy of the central government, with routine increases in MSP, has ensured good returns on paddy-wheat cultivation for farmers. As a result, Punjab shifted from its original agro-climatically suited wheat-maize cropping pattern to paddy-wheat, which is untenable both ecologically and economically.

Graphic: Ramandeep Kaur/ThePrint
Graphic: Ramandeep Kaur/ThePrint

Despite an increase in MSP, the exponentially increasing input cost for the monoculture, such as labour, diesel and other prices along with decreasing landholding, has led farmers to the debt trap, and the resultant fall in net income, as they still stick with subsidy and procurement and MSP-aided paddy-wheat monoculture, further aggravating the crisis.

According to Johl, landholdings in Punjab have decreased, so, despite increases in production and MSP, input costs can’t be covered.

Major Singh, a farmer in Upli, Sangrur, said: “I used to cultivate 100 acres on lease, but to purchase the input for cultivation, I had to take a loan of Rs 12 lakh. I had to sell two tractors to clear the loan.”

Sukhpal Singh, economist at PAU, pointed out: “Increased cost for capital intensive technology has reduced work opportunities in the farm sector, leading to a debt cycle. Farmers are in debt of Rs 1 lakh crore. Every farm household in the state is in debt of Rs 10 lakh, with income level of Rs 6 lakh per annum, leading to failure in payment. Agriculture in Punjab is a cycle of debt, de-peasantisation and death.”

The way out

Johl said the agriculture-related subsidy, which is more or less unlimited in nature in Punjab, should be converted into a Direct Benefit Transfer (DBT) scheme for farmers, based on their landholdings. Small and marginal farmers should a favourable DBT, while large farmers can pay for these facilities.

The agronomist added that economic diversification of crops is necessary for Punjab to tackle this crisis.

“An incentive of Rs 10,000 per acre can be given to farmers in Punjab for growing pulses, for example. Around 10-15 lakh hectares of paddy cultivation should be diverted immediately to other crops to avert agrarian distress in the state,” he said.

Also read: Punjab’s frustration & anger is rooted in its steep decline, now visible in farmers’ protests


Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism


  1. The truth as always is not with either opposing parties but somewhere in between. Both farmers and the government have many correct points and at some stage they will have to find the middle ground. Problem has been the style of functioning of this government, which is continuation of what previous governments did, of not consulting farmers before passing farm laws. They have behaved exactly like the old Left Front government did in Nandigram in 2007 of forcibly trying to acquire land without asking people and explaining the purpose to them. Nobody seems to have learnt any lessons from history at all and history will keep repeating like a stuck record.

  2. Why Punjab river water was canalized to oustates? If it was reminded for the use of Punjab agriculture, there would be no ground water crisis. Nor farmers were blamed for free electricity consumption of 45000 per household. Farmers were not needed to put deep bores of tubewells on which they are spending hundards of thousands per tubewell.

  3. I am son of farmer i tell you truth nobody wants to buy wheat from Punjab all wants wheat from MP only govt is buying from Punjab
    No industry is coming into Punjab Punjab per capita has fallen top to 19 in India it is decreasing every year people of Punjab just going Canada Australia and doing lower quality skilled Jobes unlike Southern and Gujrat state
    Anti corporate behaviour will further distroye Punjab that I am sure

  4. Indian farm sector is laden with multiple problem, and government’s myopia over the years have only aggravated the problem.
    The issue however is not MSP or subsidies. The issue is why respective governments have failed to encourage crop diversification, by expanding the umbrella of MSP?
    For a substantial period, as a journalist I have covered agriculture for The Pioneer and HT, but as journalist one common mistake we make is to follow our emotions and fall too much in love with our story and beget disaster like this one.
    A multifaceted problem can’t be dealt with singular solution. Food is important for all of us, so write with responsibility.

  5. To prove your point you should debate it out with Ndtv for they are the people who decide what is the truth and what is godi

  6. Could you please recheck the Tube Well Table given in the article? There seems to be some errors there. Other than that an excellent, informative article.

  7. माननीय मंत्री नितिन गडकरी जी कहते हैं कि केन्द्र सरकार द्वारा निर्धारित MSP अन्तर्राष्ट्रीय बाजार की तुलना में ज्यादा है और इसीलिए MSP का कानून बनाकर प्राइवेट मंडियों में व्यापारियों तथा उद्योगपतियों पर बन्धनकारी नहीं बना सकते , अन्यथा व्यापारी वर्ग यह फसलें बाहरी देशों से आयात कर लेंगे और हमारे किसानों की फसल बिक नहीं सकेगी।
    माननीय मंत्री नितिन गडकरी जी हमारे देश में खेती-बाड़ी हेतु प्रयुक्त सभी सामग्रियां मंहगी हैं तो किसानों द्वारा उत्पादित फसलें भी महंगी होगी। उदाहरण के तोर पर डीजल की कीमतों का ही अध्ययन कर लें।
    दिनांक 4th जनवरी 2021 को विभिन्न देशों में डीजल की कीमतें निम्नानुसार हैं।
    इंडिया 1.06$ Rs 77
    चाइना 0.86$ Rs 63
    नेपाल 0.78$ Rs 57
    बांग्लादेश 0.76$ Rs 55
    पाकिस्तान 0.69$ Rs 50
    अमेरिका 0.68$ Rs 49
    भूटान 0.63$ Rs 46
    रशिया 0.62$ Rs 45
    श्रीलंका 0.55$ Rs 40
    वियतनाम 0.54$ Rs 39
    मलेशिया 0.50$ Rs 36

    जब हमारे देश में डीजल तो हमारे सभी पड़ोसी देशों से महंगा है।
    फिर सिर्फ किसानों के उत्पादन की ही बात क्यों करते हो , हमारे देश में तो स्टील सीमेंट एल्यूमीनियम और लगभग सभी उत्पाद अन्तर्राष्ट्रीय बाजार से महंगे हैं , परन्तु फिर भी हमारी सरकार आयात शुल्क लगकर हमारे उद्योगों को जिन्दा रखी है । पर वाह रे भाजपा सरकार आपको तो सिर्फ किसानों को ही दोश देना है और किसानों को ही MSP यानि न्यूनतम समर्थन मूल्य नहीं देना है।

  8. SS Johl’ s concerns are genuine and should have been addressed a couple of decades back
    Our successive state governments slept over reforms and offered no encouragement to farmers towards diversification. It is necessary to give subsidy to farmers but with limits on basic acrage. of say 10 acres. Over that conditions should apply. There is big money in farming when done with planning by large large holders. See how the big farmers have amassed assets by avoiding taxes on the pretext of farm incomes. They are modern days maharajas!

  9. Exactly, but our government is not actually considering these aspects. It is definitely biased towards big businessmen. Had it been so government would have addressed this issues entirely different ways. It should setup educational programs for farmers on changing farming practices

  10. Exactly, but our government is not actually considering these aspects. It is definitely biased towards big businessmen. Had it been so government would have addressed this issues entirely different ways. It should setup educational programs for farmers on changing farming practices, on reducing water and electricity needs, on promoting natural farming. Modi being the business minded is misleading by promoting export through UAE corridor. Instead focus should be more on providing poison free nutritious food to the our nation. Please understand farmers definitely need better understanding of farming methods but that doesn’t mean government is right in passing bills the way it has

  11. Stupids who do not understand are talking about laws.
    Eat shit what govt is feeding you.
    Keep protesting peacefully.Their demands are just and not any party oriented

  12. Rs 10,000 per acre how do you arrive at this value . Do you think the Farmers are buggers ? Change your attitude Farmers are GOD, they provide food for this nation.
    If you need pulses that’s if the government needs pulses fix a MSP for pulses after carefully calculating the cost of production of pulses and guarantees the complete procurement.
    You will see the Farmers Change to pulses.

  13. This is a false propaganda of bjp government. For any commodity there should be a cost of production as a liter of petrol cost 23.00 rupees. Isn’t it.

    Then all the Anonymous comments and data should be ignored. For example Rs 45000 per annum per tube well is not correct.

    This government is inefficient steal the Farmers hardwork and their valueable wealth.

  14. It is not wheet and paddy. The main reasons is low qulity produce they grow which fecths low price in open market thats why the farmers of punjob inclined to govt purchise. As i am also a farmer it is very difficult to chanage the crop pattern. My advise is that conserned government should help farmers to improve there quality which fecths good price more then MSP please dont depend on in nefficent pracurement.

  15. Farmers are producing rice and wheat because an assured price available. Why not the government fixed an assured price for all other crops . Which will give the farmers confidence to grow other crops .The assured price will not harmed the middlemen be it a person or an corporate as market price more than the assured price. The government can also fixed market price for all the crops giving the same benefit to middlemen as given to farmers. It is a joke if someone says, he will remove the middle men from the supply chain.Is it possible for the foodstuff to the dinning table straight away from the field.

  16. Keep protesting and stay in your sh#t for the next 5 generations.
    Wake up you fools, this is your chance to step into the 21st Century.

    • You idiot what do you know about farming and its difficulties only bullshit !stop barking
      and waiving tails at someone’s idiots are only lapdogs of godi media and corporate crocodiles…

      • Why don’t you leave farming if it is so difficult that it forces you to abuse people who have an opposing view?

      • Hearing your rant it is clear now while people consider you to be intransigent.

        I just heard through a 2½ hour long dissection of all aspects of the said laws and there seems to be no chance of any harm coming to farmers.

        Frankly, holding Delhiites to randsom to blackmail the centre into conceding more subsidies to you from the VERY SAME TAXPAYER’S MONEY WHOM YOU ARE NOT ALLOWING TO GO TO WORK.
        It is unfair them in the extreme.

        Frankly I wouldn’t be surprised if Delhiites respond to this blackmail in a way only Delhiites can.

        • Sorry but most of the videos either dont tell you how the farmers currently work and even when they do they compare the APMC act with new laws but there have been a lot of changes in how each state Markets work. They dont discuss how states like bihar which have these new laws did not do good, they will not discuss long term impact of these laws. They do not discuss that whatever good these laws are said to bring have mostly been added by the states where they will do good, but these laws are unanimously forcing these laws on all states, even where they will be harmful. Also where these laws have been implemented by states they have put up checks and balances, whereas these laws are completely open ended for the private players to exploit,

          They never discuss that even now contract farming is allowed, they never discuss even now private players can procure , even now farmers are allowed to sell their crops anywhere in the country. These new laws are not bringing anything new just creating ways for corporate to exploit …

          Govt is just washing their hands of farmers and giving open house for private players to exploit and earn from farmers, and mind it private sector will not jump everywhere in the country, they will only involve themselves in the profit making places where they can reduce transit costs and maximise revenue

          They will not discuss why farmers dont diversify. Because diversification is even more loss making than their regular harvests.

          They forgot to mention that private players are also middlemen just they are way larger than the regional small middle men.. . They also dont mention how the current private players in farming are doing.

      • I am son of farmer i tell you truth nobody wants to buy wheat from Punjab all wants wheat from MP only govt is buying from Punjab
        No industry is coming into Punjab Punjab per capita has fallen top to 19 in India it is decreasing every year people of Punjab just going Canada Australia and doing lower quality skilled Jobes unlike Southern and Gujrat state
        Anti corporate behaviour will further distroye Punjab that I am sure

      • The farmers are not only in Punjab or in Haryana & most of the persons part of this deliberation are from villages or from rural background. Whatever, issues are being taken up by the Govt or by the farmers or by the public at large, all the stake holders have to find some middle ground. Yesterday incidents at Red Fort have put a huge dent to farmer cause. The silly farmer unions have fallen in the trap of ruling party and lost their sympathizers in genral public, as well. God save my Punjab and these farmers

Comments are closed.

Most Popular