Kharif sow­ing sea­son be­gins but govt yet to de­clare MSPS

Hindustan Times ST (Mumbai) - - HTNATION - Zia Haq

NEW DELHI: The Cen­tre is yet to an­nounce the fed­er­ally fixed min­i­mum sup­port prices (MSPS) for 23 crops for the kharif (mon­soon) sea­son, de­spite the on­set of sum­mer sow­ing in many states. MSPS are cru­cial be­cause they serve as “price sig­nals” for farm­ers and in­flu­ence their sow­ing de­ci­sions.

Usu­ally, MSPS for sum­mer crops are an­nounced by the sec­ond week of June. This year, the gov­ern­ment has an­nounced its de­ci­sion to set MSPS that are 1.5 times the cost of pro­duc­tion. How­ever, the pro­posal has not come up be­fore the cabi­net so far.

“I wouldn’t call this a de­lay. There have been in­stances in the past when kharif MSPS have been an­nounced by June-end,” an agri­cul­ture min­istry of­fi­cial said, re­quest­ing anonymity. The of­fi­cial said the MSPS could come up for the Cabi­net’s ap­proval next week.

In 2017-18, the gov­ern­ment an­nounced kharif MSPS on June 7, while in the pre­vi­ous year, they were an­nounced on June 1. In 2014-15, an elec­tion year, they were an­nounced on June 25.

MSP is a key farm price pol­icy that af­fects crop choices of farm­ers and food pro­duc­tion. For in­stance, dur­ing the United Pro­gres­sive Al­liance (UPA) years, higher MSPS for wheat and rice drove more farm­ers to grow th­ese two crops, caus­ing a short­age of com­modi­ties such as pulses. MSPS are meant to serve as floor prices for pri­vate traders, thereby help­ing avoid dis­tress sales.

De­spite bumper har­vests in the past two years, farm­ers have faced agrar­ian dis­tress mainly be­cause of a crash in com­mod­ity prices, which have ruled be­low MSPS. To woo farm­ers, the Naren­dra Modi gov­ern­ment has promised farm­ers that it will raise crop prices and also en­sure that farm­ers get ac­tual MSPS for 23 crops.

The pos­si­bil­ity of higher kharif MSPS this year has raised con­cerns of in­fla­tion. In their last re­view of mon­e­tary pol­icy, all six mem­bers of the Re­serve Bank of In­dia’s mon­e­tary pol­icy com­mit­tee agreed that there were up­side risks to in­fla­tion due to the gov­ern­ment’s im­pend­ing de­ci­sion on hikes in MSP.

Ac­cord­ing to farm min­is­ter Radha Mo­han Singh, in de­cid­ing on the MSPS, the Cen­tre would use the “pre­vail­ing method” called “A2+FL” to cal­cu­late cul­ti­va­tion costs. This in­cludes all out-of-pocket ex­penses of farm­ers plus the value of fam­ily labour used. Farm­ers or­gan­i­sa­tions have been de­mand­ing the use of “C2”, which also in­cludes im­puted costs of cap­i­tal and rental on land. Then finance min­is­ter Arun Jait­ley had also stated in Par­lia­ment on Fe­bru­ary 9 that the gov­ern­ment would use A2+FL.

“The key chal­lenge is to have MSPS that would not knock in­fla­tion too high. MSPS that are too high may price In­dian crops out of the in­ter­na­tional mar­ket. It’s im­por­tant to re­mem­ber that ex­ports are cru­cial to farm in­come. Th­ese con­sid­er­a­tions could be the rea­son for the de­lay,” said farm econ­o­mist Yogin­der Alagh.

HT FILE

MSP is a key farm price pol­icy that af­fects crop choices of farm­ers and food pro­duc­tion.

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