--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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