Farm Laws: Is MSP guarantee really the elixir that Indian agriculture needs?

News: Recently, the Prime Minister announced the withdrawal of the farm bills. He also stated that the government would form a committee to discuss how the system of minimum support price (MSP) could be more effective.

The committee proposed by the Centre will have representatives from Union and state governments, farmer groups, as well as agricultural scientists and economists.

Irrespective of the committee’s decision, a statutory guarantee to MSP will be a problem. So other options should be evaluated.

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What options have experts suggested in place of MSP?

Experts have recommended the following measures that the government can adopt instead of MSP:

– Giving remunerative prices to farmers for their produce.

– Letting the market determine the prices.

– Building mechanisms to safeguard farmers against fluctuations, like government interventions when commodity prices become dearer.

– Building efficient markets and provide price or income support for efficient production.

What measures can be looked into to protect farmers against price fluctuations?

Experimenting with Bhavantar Bhugtan Yojana. It is a price differential scheme to compensate farmers in the event of a price crash that was started as a pilot scheme in Madhya Pradesh (2018). It was not relaunched the next year owing to criticism regarding cartelisation and depressed prices.

Re-examining the Income assurance scheme introduced during Atal Bihari Vajpayee’s rule: The model calculated the seven-year average income. Based on this, if a farmer didn’t get the best yield or price in three of the last seven years, the government would compensate them.

Government should create an index of the farmers for providing price support during distress. The index should contain information’s on irrigated area, land, types of crops produced on an average, insurance cover, weather vulnerability. This index can be used for providing price support during distress.

Source: This post is based on the article “Farm Laws: Is MSP guarantee really the elixir that Indian agriculture needs?” published in DTE on 25th November 2021.

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