Thursday, 20 January, 2022
HomeTalk PointModi's war on inflation has become a war on farmers

Modi’s war on inflation has become a war on 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% 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 Swaminathan Committee Report mentioned that Minimum Support Price should be 50% more than the cost of production. This would assure farmers a certain income. It is a sensitive and sensible policy.

However, the committee has failed to defined ‘cost of production’. These vary from state to state, region to region as inputs like water, labour and land rentals are different.

If you go to Committee of Agricultural Costs and Prices, there are three levels on which this can be understood – A2, A2+FL and C2. “A2 costs basically cover all paid-out expenses, both in cash and in kind, incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel, irrigation, etc. A2+FL cover actual paid-out costs plus an imputed value of unpaid family labour. C2 costs are more comprehensive, accounting for the rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL.” (Harish Damodaram)

Agriculture in developed countries like America, UK and Japan is sustained by generous subsidies. That is not the case in India. Ever since the Modi govt took over, MSPs have the target to counter inflation and thus, haven’t been increased by much. This Rabi season, due to a failing monsoon, they realized their mistake. Cost of farming shoots up when monsoon is below normal since pestilence increases and fuel costs for irrigated land also rises.


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

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

Yogendra Yadav: National President, Swaraj India.

Vijay Sardana: Commodity Markets & Agribusiness Strategist

Siraj Hussain: Visiting Senior Fellow, ICRIER.


Cost of living has increased substantially for farming families with increase in education and medical charges. Most farmers are unable to recover enough to meet these standards. Their inability to eke out a basic living out of farming is the reason so many farmers have taken to the streets of Delhi. A low-level city clerk has the option of changing his job when his income doesn’t match his expenditure. Farmers however, lack knowledge of other skills, and have no other options.

UPA I and II, under Sharad Pawar, recognized that MSPs are integral for a healthy agricultural sector. Although wrongly blamed for inflation, rural India prospered during this time even though there were three nationwide droughts.

Modi’s manifesto promised a 50% increase but in its war against inflation, it has wrongly targeted farmers. War on inflation has become a war on farmers. Government should form a committee again under Swaminathan and ideally define cost production while factoring in its variability.

Aruna Urs is a farmer-in-residence at Bettadatunga near Mysore.

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