“The government should be commended for its effort,” said Rajiv Kumar in an interview earlier in the day, while categorising the sharp MSP growth in 2008-09 under the Congress as purely political.
But Ashok Gulati, agriculture economist and CACP chairman in 2008-09, says the international situation was starkly different that year, and it was the most important reason for the steep rise in MSPs then.
“International food commodity prices were at their peak, higher than domestic prices, and raising MSPs made economic sense. The sharp rise in MSPs did not push domestic prices of food products above international prices,” he told Business Standard.
This time, the situation is reversed. Though market prices in India are depressed, international prices are lower than domestic prices for major commodities. “The current sharp increase in MSPs would push domestic prices further upward (away) from international prices, and the government will have to procure almost all crops, which is next to impossible,” he said.
The growth in MSPs under the reigns of two ideologically opposite political competitors is evident for all six crops analysed. Take the example of paddy (common grade). During Vajpayee-led NDA government from 1999-2000 to 2003-04, its MSP rose 18 per cent. In the two UPA terms, its MSP rose by 79 per cent and 31 per cent in the two five-year terms. Under the current NDA, its MSP has risen 29 per cent from 2014-15. That for tur (Red gram) grew 23 and 30 per cent under NDA tenures, while 44 and 87 per cent under two UPA terms.
Close to the 1999 general election, the average rise in MSP for the six select crops was near 8 per cent. In the years to the run up to 2004 election, increases in MSP were moderate.
Similarly, in 2008-09, year prior to 2009 general election and 2012-13, two years before the 2014 general election, the respective governments showed a stronger resolve towards farmers’ welfare.
While political scientist and president of the political party Swaraj India, Yogendra Yadav, agrees that higher MSP actually benefits farmers, noted agriculture economist and professor at Jawaharlal Nehru University, Himanshu, says that it is not necessarily so.
“The erstwhile Congress government ramped up procurement following the highest MSP boost in 2008-09, but was unable to use the stocks for public distribution efficiently,” says Himanshu.
Unless the government is able to channelise the procured pulses to the intended beneficiaries, using public distribution system or any other channel, even a good amount of procurement would not serve the purpose, if it is unable to distribute or sell it," he adds.
In a similar vein, even if the government procures all crops, it will not be able to unload the stocks, says Gulati. “Suppose the government procures all bajra produced by farmers, where will it unload it at a price elevated due to the high MSP?” he asks.
The government cannot go against the market (prices) beyond a limit, else there will be no buyers for the costly products, he added.
Sharpest rise for bajra MSP linked to Rajasthan elections
Half of the nutri-cereal bajra (pearl millet) produced in India comes from Rajasthan. There are about 3 million bajra farmer households in Rajasthan, according to the latest agricultural census (2010-11)
“The reason behind the steepest increase for bajra, compared to all other crops, is quite evident. The incumbent BJP government is about to face assembly elections at the end of this year,” Yogendra Yadav, political scientist and president of Swaraj India told Business Standard