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Rise in farm production cost, inflation 'negate' Govt of India claim of MSP increase

By Dr Gian Singh* 

On September 8, 2021, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, announced the minimum support price (MSP) for some of the 2021-22 rabi commodities for the 2022-23 marketing season. The MSP of one major commodity of rabi i.e. wheat has been increased from Rs 1,975 to Rs 2,015 per quintal.
Welcoming the announcement, the Union Agriculture Minister Narinder Singh Tomar said that those who were spreading rumours that the MSP for agricultural commodities would be abolished need to learn from the government's decision. He also mentioned how many times the Prime Minister has assured that the minimum support prices of agricultural commodities were in the past, are in the present and will continue in the future.
A look at the MSP for wheat shows that the price increase for the 2022-23 marketing season is only Rs 40 per quintal, which is 2.03 per cent higher than the previous marketing season. In the past, a lower percentage increase was made for the marketing season of 2009-10 which was 1.85. After that the increase was more than the increase made for 2022-23.
The rate of increase in MSP of wheat has been steadily reduced since 2017-18. An increase of 6.8 per cent was in 2017-18, 6.1 per cent in 2018-19, 4.6 per cent in 2019-20, 2.6 per cent in 2020-21 and only 2.03 per cent for 2021-22.
The Union government is claiming that the increase is 100 per cent more than the cost of production, which is by no means correct. If this 2.03 per cent increase is seen in conjunction with inflation, then this increase is negative and when this increase is seen in relation to the cost of production, the negative rate of this increase is even higher as the cost of production has been steadily rising due to the uncontrolled handing over of pricing of agricultural inputs such as diesel, chemicals, seeds, machinery etc. to the unregulated market.
While the Samyukta Kisan Morcha (SKM) and some political leaders have rejected the hike in the MSP of wheat stating it as unreasonable, the Bhartiya Kisan Morcha affiliated to the Rashtriya Sevak Sangh has not only rejected the hike but also has staged protests at more than 500 district headquarters across the country, including Jantar Mantar in Delhi on September 8 to ensure remunerative market prices of all agricultural commodities as well as to control inflation.
This action of the Bhartiya Kisan Morcha has shaken the NDA government. KC Tyagi, a leader of Janta Dal (U) party, a partner party of the NDA government also disagreed with the government and called for major changes in agricultural policies.
For more than nine months now, the SKM has been protesting at various inter-state borders of Delhi and across the country for the repeal of three agricultural laws enacted by the Union government and for providing legal guarantee for the continuation of MSP of agricultural commodities.
Various experts have made it clear that allowing private markets for the purchase of agricultural commodities and contract farming laws would result in the forced exit of farmers, agricultural labourers, and rural artisans and will hamper rural development. Changes in the Essential Commodities Act, 1955 would be a major blow to consumers.
Although the Supreme Court has barred the implementation of these laws, the sharp rise in prices of essential commodities has put consumers at a disadvantage in keeping the stove burning for a living.
All the demands of the SKM are justified. Adherence to these demands will surely bring some relief to farmers, agricultural labourers, rural artisans, and consumers. In line with the larger interests of the country, these demands need to be met and the Union and State governments need to make major changes in their agricultural policies.
During 1950-51, India's 82 per cent population was engaged in agriculture and getting 55 per cent of the national income. Although the country's population dependence has dropped to around 50 per cent at present, this half of the population received only about 16 per cent of the national income before the time of the Covid-19 pandemic. These facts make it clear that in such conditions people dependent on agriculture are forced to live a very low level of living.
Surveys conducted in different parts of the country have revealed the fact that almost all marginal and small farmers, agricultural labourers, and rural artisans are born in debt and poverty, have a hard time in debt and poverty and leaving a mountain of debt and abject poverty for the next generation, they either die a death of starvation, or when all their hopes are dashed by governments and society, they have started committing suicide.
Some teachers from Punjabi University, Patiala; Guru Nanak Dev University, Amritsar; and Punjab Agricultural University, Ludhiana have conducted surveys for the Punjab government to analyse the various aspects of suicides committed by farmers and agricultural labourers in rural Punjab.
The surveys have revealed that 40 per cent of the suicides are committed by agricultural labourers and 76 per cent of farmer suicides are committed by marginal and small farmers.The main cause of these suicides is ever increasing burden of debt and aject poverty amongst farmers and agricultural labourers.The plight of the suicide-victim families remains pitiable as government assistance to these families is negligible.
There is no doubt that the prices of agricultural commodities should be profitable. Most of the farmers' organizations and some political parties put emphasis on implementation of Swaminathan's suggestion of fixing MSP’s for agricultural commodities. Undoubtedly, accepting this suggestion will turn the current loss-making agriculture into a profitable one. By accepting this suggestion, the farmers will get 50 per cent profit on their cost of production.
Surveys reveal 40% of farm suicides are committed by agricultural labourers, 76%  by marginal and small farmers
In this regard one aspect is very important, that is to know whether this will enable all sections dependent on agriculture to meet their basic needs in a respectful manner. Out of the total farmers of the country, 68 per cent are those who have less than 2.5 acres of land and 18 per cent are those who have between 2.5 acres and less than 5 acres of land.
Assuming that the average annual cost of production of such farmers is Rs 1 lakh, their profit per family income will be Rs 50,000 per annum, Rs 4,167 per month, and Rs 137 per day. Think about how a family can survive on such a low income. The two rungs at the bottom of the agricultural economy ladder are agricultural labourers, and rural artisans who are more prone to abrasion, more prone to breakage, and more prone to stumbling.
The use of machinery and herbicides in the package of 'New Agricultural Strategy' adopted to meet the food needs of the country have severely hampered the employment of these sections in the agricultural sector.
Both these sections have no other means of production except to hire out their labour. Therefore, to ensure a minimum income level for marginal and small farmers, agricultural labourers, and rural artisans, MGNREGA and other such employment schemes will have to be implemented.
Some political leaders, NITI Aayog experts and pro-capitalist/corporate people continue to provide advice/direction to farmers on crop diversification. Before adopting the 'New Agricultural Strategy’, remarkable crop diversification was found in many parts of our country.
Crop diversification is essential for maintaining groundwater levels and soil health, and protecting the environment from pollution. To do this, the government should identify the agro-climatic zones and ensure the sowing / planting of suitable crops in those areas and procurement of agricultural commodities at remunerative prices.
Employment opportunities can be increased by processing agricultural commodities and doing so can have the benefit of value-addition. The government should help in setting up cooperative owned agricultural processing industrial units of farmers, agricultural labourers and rural artisans instead of capitalists/ corporate industrial units.
The successful experience of cooperative farming of the Zamin Prapti Sangharsh Committee in Punjab and landless women in Kerala has shown that the government should provide Panchayati land to agricultural labourers and rural artisans for cooperative farming without charging any rent.
Religious institutions should also come forward in this regard. According to Sikhism, "the mouth of the poor, the sphere of the Guru." Religious institutions should provide their lands to agricultural labourers and rural artisans without charging any rent.
The benefits of co-operation can be taken up in agricultural production, management of finances, purchase of inputs required for agricultural production, sale of agricultural commodities, processing of agricultural commodities and the like.
It is the duty of the Union and State governments to provide interest free credit facilities to the agricultural dependent sections and to provide the required subsidies / grants and to rationalise these subsidies/grants in favour of the marginalised sections of the farming community.
---
*Former Professor, Department of Economics, Punjabi University, Patiala

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