Modi Government's 'Historic' MSP Hike Is Nothing More Than a Band-Aid for Farmers -Ishan Anand

Not only has year-on-year MSP growth been much higher in previous years, the government still remains silent on how it will manage to increase procurement.

The Narendra Modi government recently approved the decision to hike the minimum support price (MSP) for the kharif marketing season for 2018-19.

The MSP for paddy has been increased by Rs 200 per quintal, and the MSP has gone up for other crops too. The minister of agriculture and farmers’ welfare, Radha Mohan Singh, in his tweets, and home minister Rajnath Singh, in his press briefing, hailed this as a “historic decision”.

It is important to do a quick fact-check and put this hike into perspective.

In its 2014 election manifesto, the BJP had promised to fix the MSP at 50% above the cost of production. Months after being elected, the government took a U-turn and argued in the Supreme Court that prescribing the MSP to be 50% above the cost is not possible and that such a step would “distort markets” and “be counterproductive in some cases”.

Under severe pressure due to farmers’ protests across the country and with the 2019 elections in sight, a hike has now been approved. It must be noted that the increase at the moment is only for the kharif marketing season for 2018-19 and no policy decision has been made to fix the MSP at 50% over cost of production. There is no assurance that the same method will be followed in the rabi marketing seasons and for the years to come.    

Moreover, the 50% hike in MSP is not over cost ‘C2’ as promised, but over cost ‘A2+FL’, which is considerably lower than cost C2 as it does not include the rental value of own land.

The increase of Rs 200 per quintal in the MSP of paddy is a hike of 13% over the previous year. The MSP for arhar and urad has been increased by about 4%, while the highest hike has been done for bajra, jowar and ragi (over 30%) .

A quick look at the MSP data reveals that the year-on-year MSP growth has been much higher in previous years.

The MSP hike for paddy* this year is lower than the year-on-year hike during the three years between 2007-08 and 2009-10, and in 2012-13. In the case of other crops as well, the hike in MSP was higher in previous years. For instance, the hike in MSP for cotton (long staple) of 26% this year is lower than the 48% hike in 2008-09. The hike in MSP for sunflower seed of 31% is lower than the hike of 47% in 2008-09.

Is this then really a historic hike in MSP? Only if history began after May 2014.

Please click here to read more., 5 July, 2018,

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