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OPINION | MSP Not the Panacea for All Farmers' Woes

Farmers at Singhu border during their ongoing protest against the Centre's farm laws, in New Delhi on December 8, 2020. (PTI Photo/Ravi Choudhary)

Farmers at Singhu border during their ongoing protest against the Centre's farm laws, in New Delhi on December 8, 2020. (PTI Photo/Ravi Choudhary)

MSP scheme has been in place for decades along with cheap farm credit and other subsidies but they have had only limited benefit.

Political atmosphere in Delhi is hot even in this cold weather. Legislations intended by the government to help the farmers in getting a fair price of their produce are being opposed by certain farmer unions. It is quite ironical that Congress, which is the largest opposition party, promised abolition of Agricultural Produce Market Committees Act (APMC) in point 11 and Essential Commodities Act, 1955 in point 21 of its 2019 poll promise towards agriculture which was covered under Chapter 7 of election manifesto. However, such kind of politics is not new to our country and people are now used to it.

Farmers union from Punjab are most vocal in this protest, and therefore, it is necessary to take a stock here. As per RBI Report on Gross State Value Added (GSVA) of States dated July 31, 2020, Punjab’s GSVA from crops is Rs 76,504 crore and entire agriculture, forestry and fishing GSVA is Rs 134,594 crore for the year ended March 31, 2019. However, outstanding agriculture credit was Rs 66,766 crore for the same period. Even if the farm credit is rolling in nature, such a big amount of farm loan indicates that either the value addition is very low in agriculture sector or cheap farm credit is misused by wealthy farmers for some other purposes.

Sometime back, an RBI report highlighted the fact that loan accounts with various banks are more than the farmers in the state and this indicates a potential credit misuse. Punjab’s per acre farm yield for wheat and paddy are among the highest in the world and if our farmers still blame the government for their poor conditions then this issue needs a larger discussion.

Political correctness suggests that it is not appropriate to swim against the tides and speaking against emotional issues like this can be suicidal. However, it is necessary to put various perspectives into picture to understand the issue better and reach a conclusion.


Giving a legal guarantee to Minimum Support Price (MSP) is the core issue in this protest and I also agree that there should be a provision in law to ensure that private institutions or large corporates should not be allowed to procure farm produce below MSP declared by the government.

It is pertinent to highlight here that NDA government has hiked MSP of various crops by approximately 50% as compared to what the MSP stood in 2014. Now the government has ensured that MSP of the crop is minimum 1.5 times of the cost of production. Fear of phasing out MSP mechanism doesn’t hold any ground because government has to keep procuring food grains to distribute through Public Distribution System (PDS) and to achieve other objectives like food security, inflation control etc. It is quite bizarre that the legislations which provide freedom to farmers to sell their produce are opposed by certain farmers association.

So far as legality of MSP is concerned, it is already there in the statute under The National Food Security Act, 2013. MSP is defined under section 2(10) and obligations of Centre/State governments and local authorities for procurement and distribution of food grains are specified under the said Act.

If we see the larger issues around the agriculture then MSP is not a solution because this helps only those farmers who have surplus grains to sell. More than ninety percent of farmers are doing sustenance farming and they are producing just enough to meet their own requirements. There is a small section of farmers who are the beneficiaries of MSP scheme and if someone believes that a higher MSP is panacea for all the woes of farmer then he has certainly not understood the issue.

MSP scheme has been in place for decades and cheap farm credit along with farm loan waiver, tax free income, various kind of subsidies like electricity, fertiliser etc. are already given to farmers. Increasing population has reduced the land holding size and farmers must reduce their dependency on crops to live a better life. Government initiatives in the field of animal husbandry, horticulture, fisheries, poultry etc. should be taken positively and such activities can increase the income of rural household. Our collective endeavour should be to bring out more workforce out of agriculture sector because they are into disguise employment.

India is a vast country and there is no one size which fits all. Problem of Punjab’s farmers are different from those of states like Bihar, Uttar Pradesh and Andhra Pradesh. If the opposition thinks that it can steer a nation-wide movement riding on the back of the protestors then they are to be blamed for their misjudgement. I, too, am the son of a farmer but I don’t relate myself with these protestors.

Everyone has the right to protest peacefully in a democracy but nonsense of taking down an elected Prime Minister of the country must not be tolerated. Food “Ann” and farmers “Anndata” have special place in our culture but no one should be allowed to further their political agenda by using farmers just as a means of achieving it.

The author is a Chartered Accountant. Views expressed are personal.

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first published:December 10, 2020, 11:21 IST