Parliamentary Committee Recommendations on MSP

Syllabus: GS3/Agriculture

Context

• The Standing Committee on Agriculture, Animal Husbandry and Food Processing, submitted a comprehensive report to Parliament highlighting the potential benefits of a legally guaranteed MSP.

Recommendations 

• To increase the amount given to farmers under the PM-KISAN scheme to ₹12,000 per annum from ₹6000 given at present.
  • To extend the incentive to tenant farmers and farm labourers too.
• To declare a roadmap for implementing MSP as a legal guarantee at the earliest.
• Establishing a National Commission for Minimum Living Wages for Farm Labourers.
• Introducing a debt waiver scheme for farmers and farm labourers.
• Renaming the agriculture department to include farm labourers.

What is the Minimum Support Price?

• It is a form of market intervention by the Government to insure agricultural producers against any sharp fall in farm prices. 
• The prices are announced by the Government at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). 
• The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. 

Crops Covered under MSP

• Kharif Crops (total 14) like paddy, jowar, bajra, maize, ragi, tur/arhar, moong, urad, groundnut, soyabean, sunflower, sesamum, niger seed, cotton;
• Rabi Crops (total 06) like wheat, barley, gram, masur/lentil, rapeseed and mustard,and safflower;
• Commercial Crops(total 02) like jute and copra.
  • MSP for Toria and de-husked coconut is also fixed on the basis of MSPs of rapeseed & mustard and copra respectively.

Need for the MSP

• Farmer Welfare: Ensures farmers do not incur losses when market prices fall below production costs.
• Agricultural Stability: Provides income stability and encourages continued farming.
• Food Security: Ensures adequate production of essential crops, supporting national food security.

Arguments in Favour of Legalising MSP

• Farmer Protection: Legalizing MSP ensures a guaranteed price for farmers, shielding them from volatile market conditions and preventing exploitation by middlemen.
• Income Stability: It provides farmers with a stable income, helping them meet production costs and improve their financial security.
• Encourages Agricultural Investment: Knowing they have a safety net, farmers are more likely to invest in better farming practices, leading to increased productivity and efficiency.
• Food Security: A legally mandated MSP ensures the government can procure essential crops, supporting national food security and preventing shortages.
• Poverty Reduction: By ensuring fair prices for their produce, MSP helps reduce rural poverty and improve the overall standard of living for farmers.
• Balanced Market Regulation: Legal MSP can reduce market price fluctuations, ensuring fair trade and equitable distribution of agricultural products.

Arguments Against Legalising MSP

• Market Distortions: Legal MSP could lead to market imbalances by encouraging overproduction of certain crops, disrupting supply-demand dynamics.
• Fiscal Burden: It would put pressure on government finances, as they may need to buy and store surplus produce, leading to high procurement costs.
• Inefficient Resource Allocation: Legal MSP might result in the misallocation of resources, as farmers may focus on MSP-supported crops rather than diversifying or adopting more sustainable practices.
• Corruption and Middlemen Exploitation: Legalizing MSP may increase the scope for corruption, with middlemen taking advantage of the procurement system, reducing benefits to actual farmers.
• Stifling Agricultural Reforms: It could hinder necessary reforms by making the agricultural market too reliant on government intervention, rather than fostering a competitive and efficient market system.
• Encouraging Dependency: Farmers may become overly reliant on MSP, discouraging innovation, market diversification, and adaptation to changing market needs.

Conclusion

• The debate around the legality of MSP in India is complex and multifaceted. It involves considerations of economic policy, agricultural sustainability, and social justice.
• While the demand for a legal guarantee for MSP is strong among farmers, the government and policy makers need to consider the broader implications of such a move.

Source: TH