Farmers' protest: Were Modi and M.S, Swaminathan ‘illogical’, ‘impractical’ on MSP?

An editorial in The Indian Express on Thursday morning, 15 February, declared the farmers’ demand for a legal guarantee of a minimum support price (MSP) ‘illogical’ and ‘impractical’.

The union government’s stand is exactly that, although it rightly claims that MSP is already being provided to 22 crops.

It has, however, encouraged the false impression that a legal right to MSP would require the government to procure all crops produced, which would lead to bankruptcy.

The irony is that not only the late Dr M.S. Swaminathan, honoured with a Bharat Ratna this month, but also Narendra Modi, when he was campaigning in 2013-14, backed the demand for MSP for all crops.

A committee headed by Dr Swaminathan had, in fact, come up with a scientific formula for it and recommended that MSP should be 50 per cent more than the input costs. Were the agriculture scientist and the then-chief minister of Gujarat being impractical and illogical then?

The government now says that allowing MSP for all crops as a legal right to farmers would require a whopping Rs 10 lakh crore, ensuring the country goes bankrupt. One of the leaders of the farmers’ movement, Yogendra Yadav, scoffs at this disinformation that the government has to procure the entire produce of all crops to ensure an MSP can be implemented.

Even today, only 6 to 10 per cent of farmers sell their produce at the minimum support prices.

The government needs to procure produce from the market only when prices fall below the MSP and withdraws once a price correction takes place and pushes the market price above MSP again.

According to his estimates, says Yadav, the government will have to spend maybe Rs 50,000–60,000 crore if MSP is extended to all crops, including fruits and vegetables, at the current rate.

Even if the government agrees to implement the more equitable formula suggested by Dr Swaminathan, he says, the annual procurement cost for the government would be in the region of Rs 2 lakh crore only.

He points out that, on the other hand, the government has written off Rs 14 lakh crore of bad loans taken out by corporates and has cut down the corporate tax, which has yielded Rs 1.5 lakh crore every year to business houses.

The government may have to buy some pulses and oilseeds for distribution through the public distribution system, Yadav says, but the bulk of the produce would still be purchased by traders, exporters, middlemen and retailers.

The government, he alleged, was sending unattributable messages on WhatsApp to the media and spreading disinformation on the MSP.

The minimum support price mechanism has actually been in vogue for the past 60 years and more.

Twice every year, the Union government and some state governments announce the MSP for 22 crops. Similar benchmarks are also determined by the Coffee Board, the Rubber Board, the Coir Board, the Tea Board, etc.

However, this does not require them to buy the entire crop. The MSP is just a mechanism to ensure that prices do not fall below a given 'floor' and traders do not buy at lower prices, which in turn would affect the farm gate prices.

The MSP is, however, not a legal right yet—which allows the governments to ignore the mechanism whenever it proves inconvenient.

The BJP government in Haryana, for example, had been declaring an MSP for sunflower since 2018 and was also procuring a part of the crop and selling it at that cost. In 2023, however, it did not procure any sunflower and farmers who had diverted their lands from other crops to grow sunflower ended up suffering losses. The farmers hit the streets before the government relented and applied the brake.

There is no in general no MSP for vegetables and fruits, either—sunflower is an oilseed crop—and consumers often pay five times the price that farmers receive from traders. (We will all recall the recent fuss over tomato prices on fire and disappearing onions from fast-food favourites. The government stepped in to help consumers buy at subsidised rates; the MSP is the reverse intervention for farmers to make a living off their produce.)

Chief minister Narendra Modi of Gujarat had written a letter to Prime Minister Manmohan Singh in 2012, demanding a legal guarantee of MSP for farmers.

In his election rallies during 2013–14, Narendra Modi promised that the BJP government would accord legal status to the MSP, constituting in effect a guarantee that the mechanism was applied. Was he being illogical and impractical at the time? Is he realising this only in hindsight?

In 2015, the Modi government claimed in an affidavit before the Supreme Court that having an MSP apply for all agricultural crops would destabilise the market.

The very next year, 2016, however, it again assured farmers of an MSP—though without making it legally mandatory.

Since then, Modi and his ministers have been dragging their collective feet—although he did reiterate his commitment in 2021 while withdrawing the three controversial agricultural marketing Acts, aka the repeal of the 'Farm Laws'.

In 2022 again, though, the Union government in fact formed a committee to find ways to implement the extension of MSP to more crops—an impractical and illogical demand according to the Indian Express editorial, which appears to be heavily influenced by those shared WhatsApp narratives Yadav suspects are informing much of the media coverage.