THE ISSUE

A 2015 government think tank Niti Aayog paper titled ‘Raising Agricultural Productivity and Making Farming Remunerative for Farmers’ said the basic goal of price policy is to offer remunerative prices to farmers. But it said this cannot be “achieved through procurement backed MSP” because “it is neither possible nor desirable for the government to buy each commodity in each market in all regions”. This triggered the debate on MSPS.

MSPS have been “inadequate”, “ineffective” and “inefficient”, wrote economists T Haque and P K Joshi in a recent paper in the peerreviewed academic journal the Economic and Political Weekly.

The cost of cultivation, to which MSPS are linked, widely varies across states. But MSPS are based on a weighted all-india average. This does not guarantee equal profits to all. The latest Organisation for Economic Co-operation and Development and Indian Council for Research on International Economic Relations study showed MSPS have often been set below international prices.

MSPS have also failed to keep pace with rising input costs.

For instance, taking into account comprehensive cultivation costs between 2004–05 and 2014–15, costs of growing paddy grew by 11.2% annually in Bihar and 11.9% in West Bengal, while the paddy MSP increased at the rate of 10.6% annually.