MSP is no silver bullet to boost farmers’ income

News:  Even as the central government has announced its withdrawal of the three farm laws, farmer unions have persisted in their demand to make the minimum support price (MSP) a legal entitlement.

But, even if it becomes a legal right, the MSP, in its current form, is unlikely to resolve the problems of Indian farmers across the country.

More broad-based measures such as better access to inputs, crop insurance and agro-advisory would be far more beneficial to farmers.

Why legalising MSP cannot resolve India’s farm crisis?

The issue of quantum of price increase: Over the past 10 years, the compounded annual increase in MSP for most major crops, especially wheat and paddy, has barely matched the rate of general increase in prices.

Interstate cost variance: There is a large disparity among states in terms of cost of production of a crop due to factors such as land, labour costs and scale of production. For instance, the projected A2+FL for paddy ranges from ₹759 a quintal in Punjab to ₹2,405 in Maharashtra for the 2021-22 kharif marketing season.

However, a single MSP is declared for the entire country based on a weighted average. Thus, farmers in some states benefit far more than others from MSP, and some may even lose out if they depend on this mechanism.

Read more in the following articles:

– After farm laws repeal, farmer unions want legal guarantee for MSP. Should the govt give in?

– Legalising MSP: Challenges and way forward – Explained, pointwise

Source: This post is based on the article “MSP is no silver bullet to boost farmers’ income” published in Livemint on 7th Dec 2021.