The Congress is now promising the moon to the farmers on MSP if it comes to power in 2024, but the UPA government in 2007 had rejected the MSP formula of the MS Swaminathan Commission, saying it will “distort the market” and be “counter-productive”.
The National Commission on Farmers (NCF) headed by Dr Swaminathan had recommended that the Minimum Support Price (MSP) should be at least 50 per cent more than the weighted average cost of production.
However, when the National Policy for Farmers, 2007, was finalised by the then UPA government, this recommendation was not included. The recommendation continues to be the demand of the protesting farmers, who now also want a law guaranteeing MSP.
“The National Commission on Farmers under the Chairmanship of Prof. MS Swaminathan has recommended that the Minimum Support Price (MSP) should be at least 50 per cent more than the weighted average cost of production. This recommendation, however, has not been accepted by the government because MSP is recommended by the Commission for Agricultural Costs and Prices (CACP) based on objective criteria and considering variety of relevant factors. Hence, prescribing an increase of at least 50 per cent on cost may distort the market. A mechanical linkage between MSP and cost of production may be counter-productive in some cases,” then minister of state for agriculture KV Thomas told Parliament in 2010 in a written answer.
“Prices have risen since then and farmers’ condition has worsened under this government. We need the report to be implemented now,” Congress leader and spokesperson Randeep Surjewala said when asked about the UPA’s earlier decision.
Modi Government’s Stand
The Union Budget for 2018-19 under the NDA had announced the pre-determined principle to keep MSP at levels of one-and-a-half times the cost of production.
Accordingly, the government has increased MSPs for all mandated Kharif, Rabi and other commercial crops with a return of at least 50 per cent of cost of production for the agricultural year 2018-19. “This decision of the government was a historic one as it fulfils the commitment to the farmers to provide 50 per cent return over all-India weighted average cost of production for the first time for all mandated crops,” the government recently informed Parliament.
The Modi government acted based on the recommendation of Commission for Agricultural Costs & Prices (CACP) to increase the Minimum Support Prices (MSPs) for all notified Kharif and Rabi crops and other commercial crops for 2018-19 season with a return of at least 50 per cent over cost of production. “This decision of the government was a historic one as it redeemed the promise of fixing the MSPs at a level of at least 50 per cent return over the cost of production as announced in the Union Budget 2018-19,” a senior government official told News18.
While recommending MSPs, CACP considers the cost of production and host of factors such as demand-supply situation, trends in domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors and the likely impact of MSP on consumers and overall economy along with rational utilisation of scarce natural resources like land and water.
The costs considered are comprehensive and include all paid out costs such as those incurred on account of hired human labour, bullock labour/machine labour, rent paid for leased in land, expenses incurred in cash and kind on use of material inputs like seeds, fertilizers, manures, irrigation charges, depreciation on implements and farm buildings, interest on working capital, diesel/electricity for operation of pump sets etc, miscellaneous expenses and imputed value of family labour.
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