Farmers’ battle for MSP law. Is it a fair ask?
₹10 trillion and ₹15 trillion would be needed, some estimates have suggested. That would be comparable to the government’s capital expenditure outlay for 2024-25 of ₹11.11 trillion. However, a recent note by Crisil Research, a ratings agency, stated that if the government implemented a wider MSP policy in 2022-23, it would have needed a working capital of ₹6 trillion.
However, since the crops purchased at MSP will also be sold in the market at a later date, the actual cost to the government will be ₹21,000 crore, a modest sum. These costs will shoot up if the government were to supply it by expanding the food security scheme. In this case, the loss will be on account of consumer subsidy.
To arrive at the actual costs, Crisil considered 16 out of 23 field crops, on which MSPs are declared, and which account for 90% of the production. The cost turns out to be modest as only eight out the 16 crops required an intervention—market prices for the rest were higher than respective MSPs. Such a policy will give farmers the freedom to sow crops of their choice and be more amenable to their local conditions, the note by Crisil stated, adding, “guaranteeing MSP across crops will lead to percolation of the benefit across the country.
It will support farmer income and thereby also give a push to consumption demand." Going by wholesale crop prices in mid-February, an analysis by Mint shows that only four out of 13 major field crops require any MSP intervention. All four of these are oilseeds—where prices are significantly lower than MSP, not because of abundant domestic supplies but due to a heavy influx of cheap imported cooking oils. A pro-consumer bias in government policy—of curbing exports when international prices are higher and
. Read more on livemint.com
