Too Little, Too Late

The government has finally announced higher minimum support prices for 24 crops. But it looks suspiciously like a pre-election sop, given the procurement hiccups and poor awareness of the price mechanism

- Ajit Kumar Jha

The NDA government’s minimum support price (MSP), announced by the Cabinet Committee on Economic Affairs last week for 14 Kharif (summer) crops, is the highest ever, with prices set at an unprecedented minimum of 1.5 times the cost of production. It will cost the exchequer an estimated Rs 12,000-15,000 crore annually. This should have pleased farmers. And yet ground-level reports indicate that the announcement has brought cheer neither to the mandis nor farmers.

Why so? Because the minimum support prices declared by governments often remain on paper. According to a report submitted by the NDA government-appointed high-level committee on restructuring the Food Corporation of India, chaired by former Himachal Pradesh Chief Minister Shanta Kumar, only 5.8 per cent of the total farmers in the country are able to sell their crops at MSP. “Only states like Punjab, Haryana, western Uttar Pradesh and, partly, Tamil Nadu, Andhra Pradesh, Odisha, Madhya Pradesh and Chhattisgarh have some MSP procurement mechanisms in place,” says Dr Sukhpal Singh, professor at the Centre for Management in Agriculture, Indian Institute of Management (IIM), Ahmedabad. The rest of the states, especially in eastern India, have pitiful procurement, if any.

Although there are 24 crops for which MSP has been raised (14 Kharif and 10 rabis), procurement is effective only in paddy, wheat and cotton. This is the reason why most farmers—even in Punjab, despite the water shortage—grow paddy instead of other crops.

WOOING THE FARMER

The MSP+50 per cent announcement was first made in the 2018 budget by Arun Jaitley, the Union minister for finance. “I’m confident,” he had declared, “that this historic decision will prove an important step towards doubling the income of our farmers.”