Minimum Support for Small Farmers

In India, the agricultural minimum support price (MSP) has been frequently used as an electoral tool to win votes. The MSP hike for the 2019 kharif marketing season, declared by the central government recently, is no exception. This was the government that had retracted its electoral promise to fix the MSP at 1.5 times the cost of production on the grounds of “market distortion” and “counter-productiveness” after coming to power. Yet, it has now made a quick volte-face and proclaimed this as a “historic” increase of the MSP, presumably in view of the forthcoming general elections.

There is barely anything “historic” about this particular hike, though. Compared to the two successive regimes of the previous United Progressive Alliance government, the average annual rates of increase of the MSP for all crops, except ragi, has been lower under the Narendra Modi government. On the other hand, even before this announcement was made, in 2017–18, several kharif crops, such as tur, bajra, urad, and paddy, had already evidenced some public procurement at MSP, at 50% over the paid-out expenses plus imputed costs of family labour (A2+FL cost of production).