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MSP in a Changing Agricultural Policy Environment
The minimum support price and the public procurement system are indispensable for national food security, public distribution system, farmer livelihood and welfare, and agricultural growth. Over time, the MSP regime has been beleaguered with weaknesses. Thus, agricultural reforms are essential to rectify these primarily by firming the government’s role in agricultural marketing to ensure farmer welfare. However, the new farm laws foster a policy environment based on the laissez-faire approach that will be inimical to farmers’ interests.
India’s stride towards food self-sufficiency and agricultural growth, fostered by the green revolution, was reinforced by institutional and policy support. The primary components of the wide-ranging policy action for farmer welfare ever since the 1960s have been the minimum support price (MSP) and the public procurement system (PPS). However, the new agricultural policy—defined by the new farm laws—is laying a foundation for an environment wherein the MSP and PPS are likely to become redundant. The three legislative acts, namely: (i) the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; (ii) the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Act, 2020; and (iii) the Essential Commodities (Amendment) Act, 2020, have attracted attention to the much-debated portended outcomes. The government presents that these laws would remove agricultural trade restrictions to boost the agricultural sector and generate additional gains for farmers.
Contrastingly, there are also accusations of such laws being packed with political chicanery. Farmers, and a large section of the intelligentsia, believe that these acts will prompt an irrevocable course of development based on laissez-faire, thereby subjecting the farmers to merciless market forces, driven mainly by private/corporate business agendas and, thus, in ensuing farmers’ protests and resentment across the country. The MSP is the main point of contention in these laws; the farmers fear the discontinuation of the MSP. Such apprehensions are not hypothetical, but are based on the wide discourse of government representatives towards such intentions.
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