Unbalanced equation of MSP

13-Jul-2024 11:18 AM

The central government fixes the minimum support price (MSP) for Kharif and Rabi season crops every year and also regularly purchases some crops on this price. But the balance and equation of MSP is becoming increasingly complex and mismatched.

On one hand, farmers' organizations are strongly demanding a statutory guarantee of minimum support price for all crops, while on the other hand, the government's policy seems to be different from this.

Actually, the expenditure on purchases made on MSP has increased a lot, which is putting a lot of pressure on the economy. Despite this, MSP is being increased every year so that farmers can be made happy and satisfied. But no effort is being made to change its method.

The government's focus is mainly on the purchase of paddy and wheat because it is necessary to have adequate stock of it in the central pool at all times to ensure national food security.

Although government agencies also purchase some pulses, cotton and oilseeds as per requirement, but its quantity remains limited compared to the total production.

Special attention is not given to the purchase of coarse grains, while it can prove to be a better alternative to staple food grains. 

A new study has revealed that MSP covers only 6 percent of agricultural production, while the remaining farmers are deprived of it.

Despite this, the expenditure on the purchase of crops jumped to a high of Rs 13.50 trillion in the financial year 2023-24.

To limit the expenditure of this huge amount, emphasis needs to be laid on crop diversification and along with this, better agricultural methods should also be promoted. The value chain of agricultural products needs to be modernized.

Food grains contribute only 17 percent to the entire agriculture and allied sector basket, while fruits, vegetables, fisheries, forestry and livestock sector contribute about 71 percent. Neither the support price is fixed for these products nor is there any government purchase of it.