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- The Centre has increased the minimum support price (MSP) for wheat for the upcoming rabi season to ?2,015 per quintal, a 2% hike from last year.
- Oilseeds and pulses such as mustard, safflower and masoor dal saw higher MSP increases of up to 8% in a bid to encourage crop diversification.
About Minimum Support Price (MSP)
Declaration of MSP:
What are A2, A2+FL and C2 costs?
About Commission for Agricultural Costs & Prices (CACP)
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Benefits of Increasing MSP
- Attempt to diversify:
- The Government has increased the prices of Oilseeds and Pulses more than wheat.
- It will promote farmers to diversify the farm produce and encourage pulses and oilseeds like masoor and sarson (mustard) rather than mere wheat and rice.
- Confidence to Farmers about fair prices:
- The increased MSPs would ensure remunerative prices to farmers and also encourage them for sowing operations.
- Reduced Farm Distress and Rural Indebtedness:
- The assured prices guarantee farmers a fair price for their crops.
- This augmented and assured income can be used to reduce the debt and increase the investment.
- It will also reduce Farmer’s Suicide.
- Food Security for India:
- As the growing Food Crop remains profitable due to MSP, farmers tend to grow them.
- It ensures food safety in India.
- Employment and Poverty alleviation:
- To some extent, agriculture is a fall back option for many Indians as evident from COVID pandemic.
- During strict lockdown due to the pandemic, agriculture showed a positive growth unlike the manufacturing and service sector.
Demerits of MSP
- Not available to all Farmers:
- Most farmers would not get the benefits as they were still unable to sell their crops at that rate.
- Procurement by Food Corporation of India (FCI) is highly skewed in favour of big farmers and states of Punjab, Haryana and Western Uttar Pradesh.
- Inflation higher than increase in MSP:
- As pointed out by various farmer associations, the inflation is around 4% whereas the MSP hike on wheat is merely 2%.
- Swaminathan Committee recommended C2 Price but not accepted:
- The government provides 1.5 times A2+FL price which is relatively less remunerative.
- Against the International Norms e.g. Amber Box Subsidy:
- The MSP is considered to be a practice that distorts the market.
- It has been included in the Amber Box Subsidy at WTO framework.
Relation of MSP with Farm Laws
- Recently, 3 farm laws were passed by Parliament and they were tagged as anti-MSP and anti-farmers.
- The names of 3 farm laws are
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act.
- The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act
- The Essential Commodities (Amendment) Act.
- As per the farmer associations, allowing private sector in procurement business will slowly sideline the state-sponsored mandis- APMCs.
- The government also intends to slowly remove the MSP as per these protesting organizations.
- The arguments put forth by the Government are
- It will widen the options in front of farmers to sell their produce and may even help them get prices better than MSP.
- More efficient and even procurement unlike the present skewed nature.
- It will not hamper the MSP regime in any way.
- The FCI will continue to function in the same way as earlier.
- It will promote competition and boost agricultural infrastructure like cold storage chains, etc.
Conclusion and Way Ahead
- Inclusion of MSP guarantee in Fam laws:
- Both parties, Government and Farmers need to come to a middle ground by sitting and negotiating
- Implementation of Swaminathan Report:
- The C2 Price can help farmers to reduce their indebtedness.
- Promotion of OilSeeds, Pulses and Coarse Cereals:
- For this, the processed food related to the millets and pulses can be given rebate in GST.
- Training farmers to run cooperatives related to Food Processing can be a game changer.
- Direct Benefit transfer Schemes like KISAN:
- The schemes like KISAN augment the farmers income without violating the international norms.
Source: TH
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