Hike in MSP – right or wrong?
The NDA government announced generous
hikes in the minimum support price (MSP) for several crops in the kharif summer
season. The government also approved an increase in the MSP offered for rabi
crops. The hikes were announced a day after thousands of angry farmers descended
on New Delhi, stopped only by the use of water cannons and teargas. This signals the existence of underlying
agrarian distress.
The MSP formula doesn’t work for
most crops in the absence of substantial direct procurement by the government.
Market prices for cotton are currently close to the MSP because of traders
betting that export demand will rise due to the U.S.-China trade war.
However, it is an appreciable step
by the government. But this initiative should have been taken much earlier. The
success of Indian agriculture activity does depend upon several factors such as
weather, market fluctuations, farmers’ knowledge levels, etc. Hence support is
expected from several sources. Government's support is one of the most
important in an economy like India.
Sincere efforts are on to address the
longstanding ills of the farm sector. That the efforts need further boost is
indeed true. Farmers have always been on the receiving end despite
announcements of rise in MSP because their actual problems are not being addressed.
Every other day people talk of
minimum support price and Swaminathan's recommendations. The basic weakness in
this is, they do not translate into better income to farmers. The government
must bring out agricultural policy that provide economic benefits along with
nutrient benefits. For example the two main crops grown in India are paddy and
wheat. Government must create a farmers' cooperative with government involvement
that manages the produce and export to needy states or outside India. The
benefits goes to directly farmers. Nobody buy at minimum support price as there
are several hurdles with middlemen with political support - at present these
are the agencies which export the grains. Without this mechanism, simply harping
on MSP has no meaning.
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