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The government is right to claim that guaranteed MSP will distort the market, even as it continues to purchase food via MSP for its strategic reserve and PDS. The same government has since on a dozen occasions announced MSP”. He says, “the present government has sworn an affidavit before the Supreme Court asserting that a law to guarantee MSP to farmers will distort the market. Saha’s claims that MSP should be backed by legislation because it is a “long-standing policy”. Let’s stick to the purpose of MSP: it is not designed to be anyone’s “lifeline”. Horticulture, livestock and fishery – that form 60 percent of agricultural output – are almost entirely outside the purview of mandis and MSP. Only about 30 percent of the wheat and rice produced in India is procured (not necessarily at MSP) and about 6-7 percent of other crops. Only 40% of India’s farmers sell through APMC mandis, and only a third of farm output that is covered under MSP is sold through such mandis. Some detail: While 23 commodities are under MSP (a few cereals, pulses, oilseeds and four commercial crops – copra, sugarcane, cotton and raw jute), the government buys only a few of these through APMC mandis. Anil Ghanwat, a farmer all his life, has not once benefited from MSP. Most farmers have never sold anything at MSP. Even if we take a broader view, only a fifth of farm output potentially comes under the purview of MSP. The 2015 Shanta Kumar Committee found that only 5.8% of farmers actually sell their crops at MSP. Either he is a bad researcher or he is deliberately misleading India when he claims that “for farmers who are roughly two-thirds of the nation, MSP represents a lifeline”. Saha second argument is that MSP is the lifeline for all of India’s farmers so we must mandate it. Further, if after policy analysis MSP is still required, it must be in moderation to achieve its goal, no more. We don’t an FCI that creates mountains of foodgrains (around 100 million tonnes) that rot in the rain and are eaten by rats.
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Futures market and free imports and exports can help along with maybe some contractual arrangements with the private sector to ensure high quality storage and delivery. But he should note two things: today there are many better options to achieve that goal. MSP for wheat started in 1966-67 to build a food reserve. He is right to suggest that MSP is intimately liked with food security.
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Saha cites food security the key reason for guaranteed MSP: “India’s food independence and security against hunger … depends on farmers continuing to farm and produce food”. In this piece I consider the arguments that Avik Saha made in the Times of India on 26 November 2021. On 6 December 2021 I considered Yogendra Yadav’s approach to MSP and found it to be wanting.