‘Historic’ Hike in Minimum Support Price Is Nothing but a Farce

Agrarian crisis in India

Agrarian crisis in India

In the midst of a serious crisis in the agricultural sector and huge farmers’ movement across the country, the Modi government has announced an ‘increase’ in the Minimum Support Price (MSP) for some crops. Immediately following this announcement (which, as a matter of fact, is a much delayed announcement for the Kharif cropping season), the BJP-RSS propaganda machinery has gone all out touting it as a ‘historic’ achievement. Yet, bare facts speak absolutely otherwise: the MSP ‘increase’ is nothing but yet another electoral jumla. None of the demands of the farmers’ movement has been addressed by the announcement. Major farmers’ organisations have also called the declaration a historic betrayal with the farmers.

 Let us have a look at the facts:

The Hike Is Not Based on Comprehensive Cost of Farming as Promised during Polls:

During 2014 general elections, the BJP like many other ‘election jumlas’ had promised that MSP will be calculated based on a ‘new formula’ that is the recommendations of the Swaminathan Committee. BJP promised that the MSP will be fixed at 50% above the cost of production calculated based on ‘the new formula’. Very soon after it assumed power, it OFFICIALLY backtracked on this promise, arguing in the Supreme Court that this policy change was neither possible nor desirable!

Huge farmers’ movement have repeatedly erupted across the country from Pune, to Mandsaur to the Krishan Mukti Yatra to Delhi against the betrayal. As legislative elections in several states and the general elections of 2019 are knocking at the doors, the BJP decided to throw some more jumla and farce to confuse the people. The ‘new formula’ or the recommendations of the Swaminathan commission as demanded by farmers’ movement is to calculate the cost of production based on C2 or the comprehensive cost of farming that includes cost of inputs, paid and family labour as well as cost of land rent. But the latest hike is based on the age old formula of A2+FL that excludes the land rent. The MSP declared recently by the Modi government is much less than what a MSP based on C2 (cost of production including land rent) +50% of C2 would be.

Curve depicting MSP and C2 +50%

Curve showing gap between C2 +50% and announced MSP


There is not only nothing new in the latest declaration that can address the looming agrarian crisis, but also a clear betrayal with its own poll promise.


Massive Increase in Cost of Production Vs the Farce of MSP Hike:

This year has seen a massive increase in input costs (of fertilizers, diesel, tractors etc.) due to GST and rising petrol/diesel costs. For example, farmers now pay GST of 12% on fertilizers as opposed to 6% they paid last year. And the government assumes that A2+FL cost of rice will grow by 4.4% in nominal terms between 2017-18 and 2018-19. The assumed rate is the second lowest nominal growth in cost of production in this decade (HT, July 6). Even the A2+FL basis of cost of production is estimated on such a rate that appears far from the real cost incurred by farmers in production.

Is the Decision “Historic” as Claimed by the Government?

The present rate of hike is only more than what the MSP has been since the BJP came in power in 2014. For last four years hikes in MSP have been irrelevant as compared to the increased cost of production every year. This has further intensified the agrarian crisis in the country. And now, before state and general elections when the hike has been declared, the latest MSP declaration is being propagated as ‘historic’ by the BJP machinery. Nothing can be more farce a claim than this. In earlier pre-BJP years, the growth rate of MSP has been much more in several instances. For example, the MSP hike in paddy in the recent announcements is 12.9% whereas in 2007-08 the hike was 28.4% and 2008-09 it was 20.8% (The Wire, 6th July).

Election-time Tricks, No Policy Commitment:

  • This latest ‘hike’ announced is ONLY for Kharif crops grown in the 2018-19 season. In other words, it is neither applicable for Rabi crops, nor is it a long-term policy change.
  • NO POLICY DECISION has been taken to increase MSP by 50% over cost of production.
  • Moreover, only 6-8% farmers in India will get the benefits of this ‘rise’ in MSP.

 Betrayal on Promise of Government Procurement and Loan Waiver:

The BJP has not only betrayed the farmers on increase in MSP over real cost of farming, but also on the 2014 electoral promise of government procurement of all crops. In last four years, the government has only procured 6% of the total agricultural produce. 94% of the products of farmers were left upon market fluctuations. Also the government procurement never happens on time and thus the farmers are forced to sell their products in market as the next crop needs to be sown and inputs need to be bought in time. It is the small and marginal farmers who suffer the most in the absence of government procurement of their products. The government has also comprehensively forgotten its poll promise of complete loan waiver for farmers in the country. In the last four years, the agrarian crisis in the country has only deepened causing massive distress for farmers. We have seen how farmers have been shot at in Mandsaur, MP for demanding loan waiver. Intermittent declarations of loan waiver here and there are made for making headlines without any real relief to the farmers.

This MSP jumla is thus only the latest in a long and unending string of lies and deceptions trotted out by the BJP/RSS. As we have seen, the ‘rise’ in MSP itself is a myth – given that it is not calculated on real costs. Moreover, the MSP announced is nowhere close to what the BJP itself promised in 2014.

Moreover, the Modi government has delayed the announcement of MSP this year. This delay is a huge problem for farmers, since it gives all the wrong signals to farmers, the MSP has been announced AFTER the sowing season for Kharif crops, and hence did not provide the farmers the economic comfort they required while making the decision to sow. Again, farmers will avail of this ‘increased’ MSP only in 2019.

Clearly, for the BJP, nothing matters more than optics and propaganda. Nothing matters other than somehow winning the 2019 elections. In the process, anything is fair game: false claims and false promises to farmers. This cynical political charade has to be exposed and defeated.

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