When the Congress government first introduced Minimum Support Price (MSP) in India in 1966-67, it wasn’t due to an oversupply of crops. On the flip side, it was to encourage farming for certain crops. India wasn’t producing enough cereal to feed a large population post-independence. However, farmers were hesitant to produce crops like paddy and wheat simply because they wouldn’t fetch fair prices from the market despite requiring a lot of labour. So, the then government introduced MSP as an incentive to encourage farmers to produce these crops to feed the country Of late, farmers from Punjab and Haryana have revived their Dilli chalo (march to Delhi) campaign, demanding a legal cover for MSP. The latest protests have gained salience because of the upcoming general election. Worried that the protests could spread to Uttar Pradesh, the country’s most politically influential state, the Modi government has set up a ministerial committee, led by Piyush Goyal, commerce minister, to negotiate with the farmers. However, the committee’s latest efforts came to naught when the farmers’ union rejected its offer of a five-year plan involving the purchase of pulses, maize and cotton crops by government agencies at MSP. Farmer leaders said the proposal did not have clarity and they want MSP on all 23 crops and not just pulses, maize, and cotton crops. Officials believe that a guaranteed MSP law will cost the government Rs6-9 lakh crore – about the annual average government spending on infrastructure development. It could take a toll on the government’s coffers and it may be left with no money for other developmental activity. To get an idea of what MSP means for farmers, one has to see the issue from the farmer’s perspective. Take the situation when farmers reap a bumper harvest. That may not always be great news for farmers. What happens when there’s an oversupply of a commodity, but demand remains the same? Price will fall. When farmers try to sell their produce, they hit a roadblock. Often, the excess supply pushes prices so low that they are not able to even cover their cost of production. They’re better off destroying the crops rather than paying additional charges to transport them for sale. Not codified under law It was to counteract such situations where farmers face losses, that the government introduced MSP. The idea was simple – every year, they’d buy certain crops from the farmers and store them for later use. And they would do this for 22 mandated crops. These crops would be distributed under various ration schemes. Or the government would keep it for a rainy day in a buffer, say when a bad monsoon hurts crop supply. However, the MSP procurement isn’t codified under any law. So farmers fear that the government can turn their back on it at any point in time in the name of economic reforms. Of course, this will have serious political repercussions, but it’s still possible. That’s the primary demand of the protesting farmers. They want a law enacted around MSP.
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The latest protests have gained salience because of the upcoming general election
