7 January 2025 : Indian Express Editorial Analysis

 1. MSP guarantee is feasible

(Source – Indian Express, Section – The Ideas Page – Page No. – 09)

Topic: GS3 – Agriculture

Context

The article discusses the growing demand for a legally guaranteed Minimum Support Price (MSP) for farmers in India, its feasibility, and the political deadlock surrounding its implementation.

Analysis of the news:

What is the Minimum Support Price? 

• The MSP regime was established in 1965 by setting up the Agricultural Prices Commission (APC) (later renamed as CACP) as a form of market intervention to enhance national food security and protect farmers from significant decline in market prices. 

The Growing Demand for a Legally Binding MSP

• The push for a legally guaranteed Minimum Support Price (MSP) for farmers has reached a critical juncture, symbolized by farmer leader Jagjit Singh Dallewal’s indefinite fast and the unprecedented recommendation by the Parliamentary Standing Committee on Agriculture. 
• Farmer organizations, led by the Samyukt Kisan Morcha, are mobilizing for a stronger action plan. 
• Despite this, the Union government’s apparent reluctance to engage in dialogue highlights the political and policy deadlock.

The Ground Reality of MSP Implementation

• While MSP is announced annually for 23 crops, it remains largely aspirational. 
• For instance, farmers in Rajasthan, Maharashtra, and Madhya Pradesh received prices far below the official MSP for crops like moong, jowar, maize, and soybeans in December 2024, causing significant financial losses. 
• Without mechanisms to enforce MSP, its intended benefits are rendered ineffective, leaving farmers at the mercy of volatile markets.

The Logic and Feasibility of a Legally Binding MSP

• Critics often label the demand for legally binding MSP as fiscally and operationally infeasible. 
• However, the proposal is neither about universal government procurement nor blanket punitive measures. 
• The principle revolves around ensuring that farmers receive a remunerative price for their produce, irrespective of the buyer. 
• This entitlement can be achieved through expanded procurement, market interventions, and assured deficit payments.

Mechanisms to Operationalize a Legally Binding MSP

1. Expanded Procurement: Increasing procurement of underrepresented crops like pulses, millets, and oilseeds can address regional and crop imbalances.
2. Smart Market Interventions: Floor pricing in APMC auctions, limited government purchases during price dips, improved warehousing, and strengthening Farmer Producer Organizations (FPOs) are practical measures to stabilize prices.
3. Deficit Payments: In cases where market interventions fail, the government can directly compensate farmers for the gap between MSP and the market price, ensuring their legal right to fair remuneration.

The Financial Viability of a Legally Guaranteed MSP

• Critics often exaggerate the fiscal burden of legally binding MSP by assuming universal procurement. 
• Calculations based on realistic scenarios reveal that the cost of ensuring MSP for the top 15 crops would be Rs. 26,469 crore annually (at current MSP) or Rs. 2,00,710 crore (at Swaminathan MSP). 
• This equates to 0.5% to 4.2% of the Union Budget or up to 0.6% of GDP. The broader economic benefits, including increased rural purchasing power and economic growth, justify this expenditure.

Conclusion: A Matter of Political Will

• A legally binding MSP is a logical and achievable policy reform that addresses farmers’ economic distress and reduces rural inequities. 
• The costs are manageable within the national budget and offer significant economic dividends. 
• Implementing this measure depends on overcoming political inertia and prioritizing the welfare of India’s agricultural community. 
• With mounting farmer protests and evidence supporting its feasibility, a legally guaranteed MSP may well be an idea whose time has come.

What are the Concerns Related to MSP in India?

Limited Coverage: According to the Shanta Kumar Committee’s 2015 report, only 6% of farmers benefit from the MSP. Mainly those in regions with access to procurement infrastructure, such as Punjab and Haryana, while a large number of farmers in other states are left out.  Skewed Crop Focus: The MSP system is focused primarily on a few crops, especially rice and wheat, leading to a lack of incentive for farmers to grow other crops, which affects crop diversification and can contribute to overproduction of these staple crops.  Overburdening Procurement System: The MSP often leads to large-scale government procurement, especially of rice and wheat, causing storage challenges and wastage, and straining the Food Corporation of India’s (FCI) resources.  Environmental Impact: The focus on certain water-intensive crops like rice (supported by MSP) leads to environmental concerns such as groundwater depletion, particularly in regions like Punjab.  Dependence on Middlemen: In some cases, even when MSP is declared, farmers face difficulties in accessing procurement agencies directly, leading to dependence on middlemen who may exploit them by offering lower prices.

PYQ: What are the reformative steps taken by the government to make food grain distribution system more effective? (250 words/15m) (UPSC CSE (M) GS-3 2019)

Practice Question:  Critically analyze the demand for a legally guaranteed Minimum Support Price (MSP) in India. Discuss its feasibility, potential economic implications, and the measures required for its effective implementation. (250 Words /15 marks)

For more such UPSC related Current Affairs, Check Out: 6 January 2025 : Indian Express Editorial Analysis