Modi's MSP hike is betrayal of farmers

For the previous year 2017

"I am delighted that the promise made by the government to our farmer brothers and sisters of giving minimum support price at 1.5 times the production cost has been fulfilled. There has been a historic increase in the MSP. Congratulations to all farmers," Modi tweeted in Hindi.

In keeping with the promise made in this year’s Budget speech, the Union Cabinet has approved a hike in minimum support prices (MSPs) for kharif crops so that they are 50% higher than the cost of production, not including land costs. Modi announces this proudly and  tweets " We are honored and humbled that we had the opportunity to take a decision on the historic increase of MSP, which will further enhance India’s agricultural transformation." Officials in the Agriculture Ministry proposed much higher rate than advisory body CACP’s recommendation to cover losses due to a fall in prices of crops following bumper production.

• This MSP meager hike and grand announcement by Modi is in reality a betrayal of farmers. The revision is estimated to cost the central government just Rs 15,000 crore only. 
• Most farmers are tenant farmers and land costs form major portion of the expenditure. 
• BJP has betrayed farmers yet again by announcing MSP for kharif crops based on A2+FL costs instead of the promised C2 costs. (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)
• If MSP had been announced on C2 basis, then paddy MSP price hike would have been at least Rs 700 per quintal, but the government has only increased it by Rs 200 per quintal.
• The major crop is paddy whose MSP was increased from Rs.1,550 to Rs.1,750 a quintal i.e. just Rs.200 or 12.9% in an election year. This hike falls short of 20.8% hike announced by UPA-I for 2008-09, also an election year.
• The total Paddy MSP hike during NDA regime during 2014-18 to just 41% compared with 69% hike during UPA-II period 2009-13.
• There are no guaranteed mechanisms for procurement of most other crops. The Food Corporation of India (FCI) buys wheat and rice only from farmers directly at MSP and supply the grains under the food security law. 
• Higher MSPs alone would not bring relief to India’s distressed farming sector, because penetration of MSP benefits are limited to some states. Eastern states remain largely remained untouched by the benefits of MSP, while states like Punjab, Haryana, western Uttar Pradesh, parts of Gujarat, Maharashtra and southern states are major beneficiaries. Small and marginal farmers are not aware of these benefits.
• The much hyped MSP increase for coarse grains and pulses is of little use for farmers in the absence of robust procurement system like Paddy. To make MSP functional, Centre should also announce State wise procurement target, which is missing.
• BKU-Rajewal president Balbir Singh Rajewal said actual input costs were much higher than factored by the CACP and the BJP government. An additional input costs like GST on fertilisers and machines and diesel prices should take MSP on paddy to at least Rs 3,200 per quintal.
• This year will see three crucial elections in Madhya Pradesh, Rajasthan and Chhattisgarh and distressed farmers will surely teach lesson to ruling BJP who are also facing anti-incumbency.

Artificially depressing the agricultural commodity prices for several decades resulted in the reduced income of farmers and farm labour. If free market existed in agriculture, farm income could have been much higher. Lower farm incomes are negatively influencing unskilled labour prices as they serve as benchmark for rural population coming to cities for work. So there is urgent need for free global agriculture market for better incomes and for unskilled labour.

BJP and Modi as usual does politics with grand announcements only with style and no substance followed with relentless publicity misleading one and all. The MS Swaminathan committee’s widely disseminated recommendation, to fix MSP at levels “at least 50% more than the weighted average cost of production”, remains a holy grail or partial reality at best. The unremunerative procurement prices by government is nothing but exploitation of captive, uneducated and unskilled people who are trapped in farming as subsistence avocation. With fragmented land holdings (82% land holdings are under 5 acres), unless double the C2 prices are realized by the farmers, they can't lead dignified life. Unrealistic loss making farming will only accelerate migration of youth from villages to towns & cities and overburden its deficient infrastructure. And villages will be left with aged, old and sick people who will have to live on government pensions and other concessions.