Question of MSP regime while arguing in favour of recently passed agri bills has made the farmers apprehensive of the purpose of the bill. The article argues for allaying the fears of the farmers and explains the salience of the MSP.

Flawed argument over MSP

• The recently enacted farm bills have triggered debate on the desirability of the MSP regime.
• But, the bills do not facilitate a policy to do away with Minimum Support Prices (MSPs).
• The bills allow free entry to agents who wish to set up markets — whether they be private individuals, producer collectives or cooperatives.
• This means that the Food Corporation of India (FCI) and other associated agencies can procure in the traditional mandis, or in a new market established under this law — or in their own backyard.
• So, the argument that if the mandis cease to exist, the procurement will also cease is, in fact, flawed.
• Supporters of the bills have quoted the Shanta Kumar committee’s figures to argue that MSPs are anyway irrelevant for most of the farmers in the country.
• This linkage of the farm bills with the MSP only adds to the apprehension that farmers have about the bills.

Significance of MSP

• It is true that the procurement has remained confined to only a few crops.
• But the benefits to the farmers even beyond Punjab and Haryana are certainly not negligible.
• It is true that only a small fraction benefits directly from the procurement.
• But one cannot ignore the indirect benefit of this to all foodgrain producers in the country.
• As the procurement significantly exceeds the PDS requirement, this creates additional demand in the foodgrain market, pushing up the prices.
• This has been a great help for all the grain producers in the country, especially when the international prices have remained low for a long time now.
• The RBI’s annual report of 2017-18 on impact of MSP on the food prices conclusively shows that MSP is a leading factor influencing the output prices of the farm produce in the entire country.
• The issue of MSP is all the more important for rain-fed agriculturists, being deprived of irrigation, they don’t derive benefit from subsidies on electricity and fertiliser as their use is limited.
• So, at the moment, the only state support these farmers (primarily cotton and pulse producers) have is that of MSPs.

Conclusion

The debate on whom and how the state should support is an issue that should be addressed independently of the farm acts. Presenting these acts as an alternative to MSPs will not persuade farmers.

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