MSP, the Minimum Support Price, meaning - the farmers sell their product to the market when the market rates are higher and what remains unsold will be sold to the government at a fixed price (MSP).
Prime Minister Narendra Modi apparently announced a hike of 150% for the Kharif
Crops for all the farmers in the country. The hike will help the farmers in
such a way that they won’t be facing any losses in their input cost or labour
cost.
The Kharif Crops coming under the MSP scheme include Bajra, Arhar, Urad,
Maize, Paddy, Jwar, Ragi, Soyabean, Moong, Groundnut etc. The farmers producing
these crops will be paid 50% more than their investment costs.
But, it will directly affect Indian economy in
the future, as the farmers are producing many different crops which are
in-competitive in the national as well as international market. Crops like
Groundnut, Cotton, Rabi are left unsold and By providing the farmers with 50%
hike for all crops including the crops less competitive in the international
market, will lead to higher inflation and to curb this higher inflation, RBI
will increase interest rates which will affect the trade and industries.
Eventually, it will increase our fiscal deficit
and put burden on the government's financial plan, following the burden of
subsidies.
The European Economic Community in 1983 did
something similar, which led to higher rates of products and they had to sell
the mountains of butter and meat and milk and wine to their enemy USSR.
Major Problems
The major problem is that, the farmers in India
are not interested in the MSP or selling their products to the government, as
the payment for their crops is done after 2-3 months and more, and farmers
can't grow Rabi Crops for the coming season and they have only one way i.e. to
sell their products at market prices even if they are low, or go on a strike.
According to NSSO, more than 60% of the farmers
in the country earn less than Rs 5300 per month. Another problem is that only
40% of farms have proper irrigation through canals and tube wells.
The Telangana government, provided Rs. 4000 per
acre per crop to the farmers instead of loan wavers, keeping in mind that the
farmers spend around Rs. 4000 per acre on fertilisers, seeds and pesticides
each season, and if this amount can be taken care by state governments, then
the burden on farmers will be less.
Better Options
So, instead of providing higher MSP rates, the
govt. should
- Provide cash grants to the farmers, for per acre land they acquire and the crop they grow.
- Grant subsidies on canals and tube wells, which was previously provided by the Congress Government. Specially on drought prone states like Maharashtra.
- Focus on providing payment on time to the the farmers with crop insurance and for the crop sold.
- Realising remunerative crops.
- Reduced costs of fertilisers.
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