Doubling farmers’ income through MSP

21-10-2018


Farmers’ income can be doubled in assured manner by progressive MSP as recommended by Swaminathan Committee.

Before making any conclusion, we first try to answer these Questions:

1.         What is MSP and what is its need?

2.        How MSP is calculated in India?

3.        What are the limitations of MSP in doubling farmers’ income?

4.        What are the other alternatives, other than MSP, that can be used to double farmers’ income?

MSP, the Minimum Support Price is the minimum price promised by the government to the farmers.

Need of MSP

  • To assure

1.         Minimum income to farmer

2.         Food security

  • To promote

1.         Agriculture production

2.         Rural economic growth

3.         Sustainable economic growth

  • To help bridge

1.         Rural-urban divide

2.         Rich-poor gap

MSP in India

  • A type of market intervention taken by government of India
  • Announced by government of India
  • Calculated and recommended by CACP
  • Announced at the beginning of sowing period
  • Not universal
  • Open ended scheme

Methodology of MSP calculation

CACP adopts different methods to calculate MSP. They are

1.         1.A 2 cost

2.         2.A 2 + FL cost

3.         3.C 2 cost

4.         C 3 cost

Limitations of present methodology

It ignores

1.         Demand- supply conditions of the market

2.         Inter-crop price parity

3.         Agriculture – industrial products price parity

4.         Price trends in the domestic market

5.         Price trends in the international market

6.         It fails to analyzes terms of trade

How to double farmers’ income through MSP?

1.         Suggestion by Swaminathan Commission should be implemented i.e. government should declare MSP at C 2 + 50%.

2.         The price disparity created since independence must be gradually gapped down.

Shortcomings of MSP

  • Not universal
  • Limits risk taking appetite of farmers
  • Against agro-climatic zoning
  • Creates regional disparity
  • Against balanced diet
  • Burden on exchequers

Substitute for MSP

  • Income assurance either in the form of IAS or UBI
  • Commercialization of agriculture
  • Infrastructural development in rural India like

1.         E-NAM

2.         Storage

3.         Retail chain

4.         Road & telecom connectivity

Conclusion

  • MSP or no MSP, does not matter. The wrongs against farmers must be rectified to bridge the gap between the income of farmers and non-farmers.
  • Our objectives should be to enhance farmers’ quality of life so that agriculture becomes a dignified occupation.
  • Value additions to agri-products, promotion of allied agriculture activities, well developed marketing chain, etc. will help double farmers’ income with supplementary role of MSP.

latest Current Affairs