Sup­port Price Cal­cu­la­tion may In­clude Value of Fam­ily Labour

The Economic Times - - Decoding The Budget - Mad­hvi.Sally @times­group.com

New Delhi: The gov­ern­ment is likely to con­sider ac­tual ex­pen­di­ture by farm­ers plus the value of fam­ily labour to cal­cu­late in­put costs of cul­ti­va­tion and fix sup­port prices that will give 1.5 times the cost thus cal­cu­lated, of­fi­cials said. It is not likely to use the other method of con­sid­er­ing com­pre­hen­sive cost, which is much higher be­cause it also in­cludes the im­puted rental value of the land owned by the farmer, they said.

In his Bud­get speech, fi­nance min­is­ter Arun Jait­ley said MSP for kharif crop would be at least at one and half times of their pro­duc­tion cost, but he did not give more de­tails. He is ex­pected to com­mu­ni­cate to the Com­mis­sion for Agri­cul­tural Costs & Process (CACP) the de­sired mech­a­nism to cal­cu­late the MSP. Niti Aayog mem­ber Ramesh Chand said the ac­tual ex­pen­di­ture on var­i­ous in­puts, called A2 in of­fi­cial par­lance, along with fam­ily labour (FL) should be used, not the more com­pre­hen­sive cost, which is called C2. “In my view the gov­ern­ment will take A2 plus +FL, to give mar­gin of 50% for con­sid­er­a­tion of MSP. The ra­tio­nale for this is that rental value of own land which is in­cluded in C2 is not in­curred by 88% of the farm­ers,” Chand said.

An­other gov­ern­ment of­fi­cial said the likely cal­cu­la­tion method would be a big boost for low-mar­gin crops, while other crops were al­ready get­ting good re­turns. “The MSP shows that for wheat, mus­tard and chana, farm­ers has got re­turns of over 50% when A2+FL costs are used. In wheat it has been 112%,” he said. The A2+FL mea­sure in­cludes paid out costs- like seed, fer­til­izer, ir­ri­ga­tion, pes­ti­cide, ma­chine labour, hu­man labour , bul­lock labour and in­ter­est on work­ing cap­i­tal plus an im­puted value of fam­ily labour.

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