The Union Government has increased the minimum support price (MSP) of wheat by Rs 150, setting it at Rs 2,275 per quintal for the 2024-25 rabi marketing season. This marks the most substantial MSP increase for any marketing season (rabi or kharif) since the Modi government assumed power in 2014.
GS3- Farm Subsidies
In the context of recent hike in MSP, analyse its impact on the Indian farmer segment. What are the challenges face by the MSP system and how can they be addressed? (15 marks, 250 words).
Impact of the increase in MSP:
- This decision holds particular significance for Madhya Pradesh and Rajasthan, both of which are major wheat-producing states and are heading into elections.
- The MSP for five other rabi crops, including gram, barley, lentil (masur), rapeseed-mustard seed, and safflower, has also been raised.
- The enactment of three Central farm laws in 2020 had raised concerns among farmers that the government intended to dismantle the established MSP system.
- These laws were eventually revoked after a year-long farmers’ protest. Since then, the central government has consistently increased the MSP for various rabi and kharif crops to address the doubts and apprehensions of the farming community.
Challenges of MSP:
- A crucial demand, which is the legal guarantee of MSP, remains unaddressed.
- Although the MSP is intended to be the minimum price at which the government’s procurement agencies buy foodgrains, it sometimes ends up being the maximum that farmers can obtain.
- Many private traders or companies are not hesitant to offer farmers unfair deals.
- Government procurement is mostly limited to a couple of crops, namely rice and wheat, and only a few states have a robust procurement system.
- In the 2019-20 period, 85% of India’s wheat procurement came from just three states: Madhya Pradesh, Punjab, and Haryana.
There is a pressing need to ensure that the MSP system benefits farmers across the country and covers a wide range of crops, including pulses and oilseeds. Achieving crop diversification will remain a distant goal until all designated crops provide farmers with remunerative prices.