THE MSP TRAP: ASSURED STABILITY FOR SOME VERSUS TRUSTING THE FARM REFORM PROMISE OF UPWARD MOBILITY
0-The farmers from Punjab, Haryana and western UP who have massed up at Delhi’s borders demanding that a minimum support price guarantee be written into the statute books and rollback of the farm law weakening the APMC mandis convey a stark message: they trust MSPs rather than reforms for income stability. In other words, they would rather stick with price stability rather than the promise of upward mobility held out by reforms. Instead, they want a promise on MSPs.
In their defence, the paddy and wheat farmers point to farmers who burn their fingers with other crops not supported by MSP or public procurement due to factors like market glut and price crashes. Though Centre has been at pains to clarify that there is no move to phase out MSPs and even increased the kharif procurement levels from last year, the farmers of Punjab and Haryana who benefit from MSPs aren’t convinced.
MSPs have rode on the back of FCI’s paddy and wheat procurement mandate to support India’s central food security programme, which is still moored around these two crops. In a food security programme benefitting the poor, it made sense for India’s socialist impulses to tackle two scourges with one stone through direct state-driven procurement from farmers instead of middlemen at an assured price.
However, due to India’s fragmented agricultural land holdings, 86% of farmers with small and marginal land holdings haven’t benefitted from MSPs: the forbidding cost of transportation to mandis and indebtedness to middlemen who willingly offer loans and advances, keeping them out of the support net. One way to bring about equity is to offer a direct benefit transfer per hectare to the actual tiller and free them to sell their produce to traders, allow the government to purchase paddy and wheat for food security needs from the open market, and create a subsidised cold chain network down to the block panchayat levels, if not gram panchayats, that facilitates crop diversity and reduces wastage.
This would still be a radical departure from the MSP regime. Digitisation of land records — a necessary precursor for farm income stability schemes like Rythu Bandhu in Telangana and Kalia in Odisha, to calculate ownership by acreage and certify ownership — is a work in progress in many states. In the interim, Centre’s PM-Kisan is a rudimentary cash transfer scheme that offers a basic minimum income support to farmers without factoring their holdings or other input costs.
However, the important aspect is whether governments show the political courage to rollback all other subsidies and procurement schemes once a robust income support scheme is in place. Otherwise, balancing the budget will become difficult. The ethical question of transferring large amounts of public money to large farmers unconditionally and identifying the actual tillers given the extent of sharecropping and land leasing pose logistical problems. But the distortion of farm markets to the extent that paddy is grown in a non-endemic region like Haryana and Punjab and sugarcane in water scarce Maharashtra has to be corrected soon to avert ecological mayhem.
Writing MSP into law for select crops isn’t feasible given the legal binding this imposes on governments and the implications of all farmers sowing only a few crops. The farmers’ maximalist position won’t find takers in government. At best, the protesting farmers will get assurances on MSPs and must be satisfied with it. The farmers would also have made a point to the government about their ability to mobilise support. It remains to be seen what impact the protests will have on the Centre’s zeal for reforms. If the all conquering BJP decides that it is better to continue with the status quo instead of pushing economic reforms that hurt entrenched interests, it would be an unfortunate outcome. May good sense prevail.
DISCLAIMER : Views expressed above are the author’s own.