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Knee-jerk reactions by the government will not help farmers, go for institutional reforms

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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 percent 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?

The report covers many critical issues responsible for distress, including an emphasis on MSP. It was found that even production cost is not covered while fixing MSP. There was no correlation between MSP and uncontrolled increase of input cost such as seed, diesel, pesticides and specially labour.

The government announces MSP for many crops but does not make an arrangement for procurement except for wheat and rice in selected states of Punjab, Haryana and A.P. For Paddy produced in Bihar, Eastern Uttar Pradesh and Jharkhand, MSP was not implemented until a few years back. They were at the mercy of commission agents and were selling at 65 percent to 70 percent less than MSP.  For rain-fed crops of oil seeds, pulses, even the minimal procurement arrangements are not made. As and when there is an outcry or elections, the government initiates procurement on selective basis.

In regard to perishables the conditions fluctuate highly. There is no MSP for vegetables and fruits and to cover market risks.

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

Yogendra Yadav: National President, Swaraj India.

Vijay Sardana: Commodity Markets & Agribusiness Strategist

Siraj Hussain: Visiting Senior Fellow, ICRIER.

Aruna Urs: farmer-in-residence.

A Risk Mitigation Fund was recommended in the report. The report’s recommended additional 50 percent on MSP as take-home income is of great significance to the farmers because it has exposed the deficiencies in the working of CACP, failure of procurement institutions and the deliberate suppressing of prices.

The issue here is investment versus income. The government must initiate measures to reduce cost of production, improve seed quality, introduce pest control technologies and prevent distress sale.  Mechanisation (making machines available at nominal price), linking MGNREGA with farming will save 25 percent to 30 percent, removing taxes on inputs, better extension services will create a favorable condition.

The best example is Brazilian sugar crop planning that takes place with farmers and industry to assess national need, export opportunity and ethanol requirement — thereby creating a win-win situation for the national economy.

On the contrary, in our country there is no co-ordination between farmers, government, exporters and researchers. Knee-jerk reactions by the government will not satisfy farmers’ demands. The Swaminathan report suggested institutional reforms. The present impasse can be resolved by convening a special Parliament session to discuss issues and announce policy changes.

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

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  1. Excellence is some pockets just like islands in waste ocean. Ideas need to be published and need to create platforms. Is it bad idea to have tv channels showing best practices?

    Structural reforms does not bear fruit over night. Does anyone has patience? None of political parties have delivered substantial on this matter along with continuity

    Just like gst. By looking at few issues opposition started taking u turn.

    We have to make political class agree upon action plan stick to it despite Change in power.

  2. The article is falling short of suggesting concrete institutional reforms. Why does he not prepare a blue print of action points? Simple parliamentary debate will not come out with solutions.

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