Fact Check: Has the BJP Really Fulfilled Its MSP Promise as It Claims? -Kabir Agarwal
While the government has claimed that it has fulfilled its promise of MSP at cost plus 50%, the claim is misleading. The MSPs fall short of offering returns at 50% over comprehensive cost of production, as the BJP had promised prior to 2014.
New Delhi: On July 4, the Narendra Modi-led government at the Centre announced the Minimum Support Prices (MSP) for the 2018-19 kharif season. In a tweet, Narendra Modi termed the increase ‘historic’ and claimed that his poll promise had been fulfilled. While the increase in MSPs were substantial for certain crops, has the BJP actually fulfilled the promise that it made to farmers during the 2014 election campaign?
Prior to the 2014 Lok Sabha elections, Narendra Modi had campaigned extensively trying to woo farmers by promising that if voted to power, his government would implement the recommendations made by the Swaminathan commission on farmers. Tangibly, the promise was, in the words of Modi, “We will change the minimum support price. There will be a new formula – the entire cost of production and 50% profit.”
After the MSP hike, in its propaganda, the government has claimed that it has provided farmers with MSP at cost plus 50%, as was promised by Modi before 2014, and hence the promise has been fulfilled.
To ascertain whether the promise has been fulfilled or not, it is important to understand the costing mechanisms that are used to determine MSP. The MSP for eligible crops is declared by the Commission for Agricultural Costs and Prices (CACP). The CACP has three different definitions of productions costs – A2 (actual paid out cost), A2+FL (actual paid out cost plus imputed value of family labour) and C2 (comprehensive cost including imputed rent and interest on owned land and capital). As is evident, C2 > A2+FL > A2.
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