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The Minimum Support Price (MSP) was introduced in 1966-67, when there was severe food shortage in India. Subsequently, the government improved wheat and rice varieties to increase domestic food grain production. Varieties of seeds, better irrigation systems, mechanization, expensive 'green revolution' technologies, including chemical fertilizers and pesticides, were promoted.
Hence, to compensate for the increased agricultural costs, the government provides a minimum support price to farmers as guaranteed financial aid. This increased foodgrain production and India achieved food security and self-sufficiency in foodgrains.
As a result of proper implementation of minimum base price, MSP, intensive farming technology with the help of groundwater irrigation was adopted in states like Punjab and Haryana, which recorded high productivity of major cereal crops (wheat and rice). The annual productivity of these two crops reached 10-12 MT per hectare. This is almost double the national average and also ranks among the highest globally.
Madhya Pradesh and Chhattisgarh have made similar remarkable progress in the last decade by effectively adopting a minimum base price system. Thus, the MSP policy ensured the adoption of better technology in agriculture which has increased wheat production in the country by 10 times and rice production by 4 times compared to 1960.
Meanwhile, despite the availability of high-productivity intensive agricultural technologies, the area and production of oilseeds, pulses and coarse grains declined in the absence of minimum support price system.
It is regrettable that the Narendra Modi government, which awarded the highest civilian award, the Bharat Ratna, to eminent agronomist MS Swaminathan months after his tragic demise, has shied away from the the Swaminathan formula, whose implementation the farmers have been demanding by having a legislation for guaranteed price is necessary for agriculture.
The Modi government is trying to suppress the current farmers’ agitation in various ways. One should note that Modi as the Chief Minister of Gujarat advocated Guarantee Act and also spoke about implementing the report of the National Farmers' Commission headed by Swaminathan. After becoming Prime Minister, Modi and BJP have changed their stance on both the issues. As a result, the agriculture sector is now in dire straits, waiting to emerge from its existential crisis, even though foodgrains production has been increasing year-on-year and buffer stocks have ensured adequate supply of foodgrains.
Farmers' income will double -- this claim was important for Modi to win for the second time. Now, Modi and BJP are keeping silent on the issue in the background of farmers' intense struggle for guaranteed MSP. It is distressing that extraordinarily harsh and brutal measures have been taken to prevent the farmer agitators from crossing the border in Haryana to reach Delhi.
The Modi government had said that after the consecration of the Ram temple in Ayodhya on January 22, 2024, Ram Rajya would begin. In the system envisioned under the Rama Rajya, justice and fairness are followed and people are ruled with consideration. But, paradoxically, with such major claims centred on Ram Rajya, the BJP rule in Haryana is trampling on the constitutionally guaranteed fundamental rights of farmers to agitate and protest, purposefully using drones, pellet guns and other coercive measures to prevent them from marching towards Delhi.
Because of such punitive measures hundreds of farmers participating in the peaceful march have been injured. Many farmers have suffered eye injuries, and many of them have lost their sight. Drones have been used to fire teargas shells, too. The 21-year-old young farmer Shubhkaran Singh died due to bullet injury. This has created a lot of anger against the Haryana government, and the agitating farmers have vowed to continue the agitation peacefully.
The corporate-controlled media is propagating a false narrative that farmers' tractors at protest sites are nothing more than makeshift military tanks deployed to incite violence against the law enforcement agencies. The purpose of such reports is to discredit farmers and their struggle.
Under the Modi government, while the agriculture sector is awaiting justice, the corporate sector is enjoying the tax. Since September 2019 the basic corporate tax rate for corporate companies has been reduced from 30 percent to 22 percent. The tax rate for newly formed companies has been reduced from 25 percent to 15 percent.
All these measures to reduce the tax rate have been taken to "attract investment", according to the finance ministry, but corporates have not made any additional investments after the tax breaks they have received, and this has strained the government exchequer. It is estimated that corporates benefited a whopping Rs 6 lakh crore from the tax cut, for which they did not have to protest.
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By not enacting the Guarantee Price Act, the government has given free rein to middlemen to exploit the farmers. They buy the farmers' produce at a lower than the guaranteed price. In the absence of a legal guarantee of MSP, more than 90 percent of the agricultural crops produced in the country are purchased by middlemen at rates 20 to 50 percent below the MSP price, thus causing a loss of Rs 20 lakh crore annually to the farmers.
Buying agricultural produce below MSP from the middlemen does not bring any benefit to the consumer, as the prices of agricultural producers in the retail open market are always 50 percent higher than the MSP price, which means that due to biased government policies, the middlemen are eating up all the profits in the Indian agricultural produce market.
A report by Indian Council for Research on International Relations-Organization for Economic Co-operation and Development ( ICRIER-OECD) shows that by keeping the prices of agricultural commodities artificially low, the government's biased policies have continuously kept farmers below poverty line. The report states that low agricultural commodity prices due to biased government policies had cost Indian farmers Rs 14 lakh crore in 2022 alone and Rs 45 lakh crore between 2000 and 2017 at 2017 prices, and farmers are committing suicide due to exploitation based on this biased government policy.
In order to make the minimum base price a legal guarantee, the Agricultural Produce Market Committee Act needs to be amended by inserting a clause saying that 'it is not legally permissible to purchase at prices lower than the declared MSP minimum base prices in the auction of agricultural produce'.
Many doubts are being expressed on the implementation of legal minimum base guaranteed price. It is said that agricultural produce would not be sold in the markets of Agricultural Produce Market Committees, traders may boycott the purchase of agricultural produce, and the government does not have physical and financial resources for purchase, storage, marketing etc. of the purchased agricultural produce.
All these doubts propagated by vested interest lobbies in administrative and business community are irrational. While there is a slight surplus in India's wheat and rice production compared to domestic demand, there is still a large deficit in the production of oilseeds, pulses and other crops.
In 2022, domestic demand for wheat was 103 million metric tons and for rice it was 109 million metric tons. In February 2022 the Indian government forced a ban on wheat exports due to fall in wheat production. In an attempt to increase local supply in view of the decline in cultivated area, the export of rice was also banned. Therefore, a boycott of agricultural production in the legal norms of minimum base price by traders is a fallacy, as the supply of foodstuff is less than the demand for agricultural produce.
The fact is that the government has been able to procure only 26 million metric tons of wheat against the target of 44.4 million metric tons set for the year 2023. In India, which claims to have a Rs 415 lakh crore annual economy, the government waives off loans of Rs 20-25 lakh crore to industrialists. Given this backdrop, the MSP guarantee law should be enacted to save the farmers. Middlemen and lobbyists with vested interests, meanwhile, make childish claims about the collapse of the country's economy.
According to the government, over Rs 2.26 crore was transferred to farmers for the purchase of over 60 million metric tonnes of paddy and 26 million metric tonnes of wheat. Apart from this, India imports edible oil worth Rs 1.38 lakh crore and pulses worth Rs 20,000 crore in 2022-23, i.e. India already spends more than Rs 5 lakh crore on government procurement and import of agricultural products.
Hence, claims that the legal guarantee of minimum base price will lead to economic crisis for India are completely irrational. After all, the guaranteed value of total production of 23 crops is about Rs 17 lakh crore, as per government estimates.
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