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If we can afford to recapitalise banks and a bullet train, why not MSP for farmers?

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Thousands of farmers marched in Delhi on Monday, demanding a one-time full loan waiver, fair crop prices and the fulfilment of the Centre’s promises to them. PM Narendra Modi had promised a minimum of 50 per cent profits over the cost of production during the 2014 election, based on the recommendation of the National Commission of Farmers chaired by Prof. M.S. Swaminathan. In 2015, the Centre dropped the proposal stating it may lead to market distortion.

ThePrint asks: Is the Swaminathan committee recommendation on MSP a practical solution to farmers’ grievances in India?

This could be the first step in the right direction. It cannot – and no single policy measure can – solve all the farmers’ grievances, as these are rooted in the economic and ecological crisis of Indian agriculture. But if executed sensibly, and combined with other policy measures, this suggestion of the Swaminathan Commission can be the lifeline the Indian farmers need so desperately.

Why do the farmers need this? Because, as any farmer would tell you “kheti ghaate ka sauda hai” (farming is a loss making proposition). The Indian farmers do not get a fair price for their crops as compared to their cost of production or their household needs or the retail prices paid by the consumer. This is a national scandal.

That is why the Swaminathan Commission proposed a fair deal: the government must ensure at least 50% margin for the farmers over their total cost of production by offering this as Minimum Support Price. The cost in question is called C2, a national weighted average of cash outflow + family labour cost + other imputed costs of that crop across the country, as measured by Commission on Agricultural Costs and Prices.

Here are other sharp perspectives on Swaminathan committee recommendation on MSP :

P. Chengal Reddy: Chief Advisor, Consortium of Indian Farmers Association

Vijay Sardana: Commodity Markets & Agribusiness Strategist

Siraj Hussain: Visiting Senior Fellow, ICRIER.

Aruna Urs: Farmer-in-residence.

How can the government ensure this? By revising the MSP as per the recommendations of the Swaminathan Commission report and by making it a statutory right. The government need not, and simply cannot, purchase all the farm produce. It can expand the current procurement to some extent, especially for dal and coarse grains. For the rest of the crops, the government will have to resort to a combination of strategic market intervention and deficit payment whenever the farmer is forced to sell her crop lower than the MSP.

Would it lead to a rise in food prices? Yes, and the way to save consumers is to not shift the burden of subsidies to the farmers, but to check cost of production, reduce the margin of the middlemen and to use the public distribution system to provide cheap food to the poor. Import duties will have to be used more deftly to save Indian farm products from invasion by cheap imports.

Can the country afford it? Surely, if we can afford Seventh Pay Commission to government employees, if we can recapitalise banks and afford a bullet train, why not MSP for farmers? It’s about the government’s priorities. I call it political will.

The author is National President of the newly formed political party Swaraj India and is among the leaders of the All India Kisan Sangharsh Coordination Committee.

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  1. Lefties truly leave their brain before typing or opening their mouths.

    A shut banking system would collapse the economy. Bullet train is funded by a Japanese soft loan. Why, why do we suffer these fools!

  2. This is a very ignorant article. Not only is it clearly biased and severely lacking in Economic understanding and insight, the author seems to be altogether uninterested in an answer to his own rhetorical question. What the author calls political will is actually a fear by the Centre of affecting the market adversely. MSPs harm consumers and make the market inefficient. It is indeed sad that the farmers are in this state, but the government has to address the cost issue rather than the price one. MSPs incentivize noncompetitive techniques, which will only harm the country in the future.
    The government priorities should be towards the future, and bullet trains and other infrastructure projects are more important for long term growth.

    The author himself is clearly biased, opinionated, boorish and ignorant. He is ignorant not only of basic economics, but also of his own ignorance. Now ask yourself a simple question: is this an attempt by the journalist to sincerely question the government’s actions? Probably not, I like to call it political will: something all journalists lacking rigor and talent employ to sway the opinions of those who have the same political opinions. I suggest everyone to skip this guys articles from now on, if this is the level of economic understanding present in them.

  3. If there is drought farmer bear it, they lose money with nothing to sell. Now next year full crop so every farmer got full crop now everybody wants to sell result Selling Price less than cost price. Next year may be drought or flood. Cant Govt have cold storage and give them to farmers for free of rent so he can use it and sell when there is profit.

  4. Silly whataboutism (bullet train,etc) coupled with a fact-free emotional argument for a proposal that will needlessly burden the exchequer with no long-term benefits

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