--classstrugggle-flipmag CS Aug-2018 MKP | Page 18

Political & Economic Notes:

The Central Government announced the Minimum Support Price( MSP) for major crops on July 4 and is claiming it to be the‘ historical hike’ of MSP thus fulfilling its election promises. It also claims that latest rise in MSP will give the farmers a one and half times of the production cost as promised in the election manifesto of BJP.

Now the question is whether the hike in MSP is‘ historical’? Whether it will fetch 1.5 times of the production cost of major crops as promised in BJP’ s Manifesto? Whether farmers will be able to sell their produces at the MSP declared? And finally will all these measures bring respite to the millions of farmers who are in a permanent state of distress, desperation and destitute?

As part of the customary practice, every year before Kharif and Rabi crops MSP for various crops are announced by the Central Govt. as per the advice of Commission for Agriculture Costs and Prices( CACP). Under severe pressure from farmer organizations and with an eye on the impending general election a comparatively slight hike( not historic) was announced by the Narendra Modi Govt. this year. But the measurement on which the hike in MSP pronounced was a complete betrayal of the long standing demand of farmer organizations to implement Swaminathan Commission recommended formula( C2 + 50 %). When Modi Govt. claims that MSP was raised to the 1.5 times of production cost it refers to A2 + FL( actual cost plus family labour) formula rather than C2( actual cost plus family labour plus rent of the land and interest foregone on investment) formula. There is a big gap between the two.

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Take the example of paddy. According to the A2 + FL formula the production cost is Rs. 1166 /- per quintal and according to Swaminathan formula i. e. C2 it is Rs. 1560 /- per quintal. Therefore MSP according to Swaminathan commission formula is to be Rs. 2340 and as per Govt declaration it is Rs. 1750 /- Thus there is a huge gap of Rs. 590 /- per quintal of paddy.( see Table: 1)

Modi Govt. also claims the hike in MSP is‘ historic’. Again it proves to be a false propaganda like many other. In the first 4 years of Modi Govt., the increase in MSP of major crops was very low even less than the increase in consumer price index. Here the table shows the fake claims of the Govt.( see Table: 2)

The MSP mechanism is primarily enforced through procurement by the public agencies like FCI for wheat and paddy only. This procurement is also limited to certain states only and is completely absent in UP, Bihar, Assam and other North Eastern states. Moreover, the government decided long back to limit the procurement of paddy and wheat to the extent of deficit in the buffer stocks only. It also made clear to the state governments that the cost of any additional procurement should be borne by themselves. It also winded up procurement operations of FCI and is asking the states to procure on behalf it. To top it all, the government decided to close down the public distribution system on the plea of burdensome food subsidies. So the mere announcement of MSP is not going to help the peasants in realizing higher prices. The experience of last two decades shows that MSP became Maximum Selling Price in the absence of public procurement agencies.

Anticipating this point of view from the critiques, the Finance Minister in the Budget had promised that NITI Ayog would work with the Centre and states to put a fool-proof mechanism in place so that farmers get adequate remuneration if the market prices slip below the MSP. And nothing is heard about this exercise and there is no announcement on the procurement strategy for the year.

Table 2: on page 21

Table- 1 calculated prices of major crops according to MSP and Swaminathan formula in the year 2018 – 19

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