In the earliest announcement of minimum support prices in at least a decade, Agriculture Minister Narendra Singh Tomar told the Lok Sabha that the Cabinet has approved MSP hikes for six crops, including a 2.6% increase in the rate for wheat. Last year, MSP for wheat had seen a 4.6% increase.
This comes in the midst of a vehement protest by farmers, who fear that new agricultural marketing reforms will result in the phasing out of MSP and public procurement.
The MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one and a half times the cost of production incurred by farmers. The MSP for wheat will be increased by 2.6% or ₹50 per quintal to ₹1,975 per quintal for the upcoming rabi or winter crop season, according to the decision taken by the Cabinet Committee on Economic Affairs on Monday. MSP rates were also hiked for five other winter crops -- barley, gram, masur dal, safflower, and rapeseed and mustard.
For more than a decade, MSPs for the rabi season have been announced in October or November, as winter planting begins. However, this year’s MSP announcement comes just a day after Parliament cleared two controversial Bills, which will facilitate contract farming and the sale of agricultural produce outside the notified Agricultural Produce Market Committee (APMC) mandis where most procurement takes place.
“While the Congress is telling the entire country that the MSP and APMC will be removed after the passing of the agricultural reform Bills, this Cabinet decision is a proof from the government that they will remain,” Mr. Tomar told Lok Sabha.
Opposition parties and a range of farmers groups, including those affiliated to the RSS, have warned that the new legislation will result in a dilution of the MSP regime and government procurement. They are demanding that the government include a legal guarantee for MSP to ensure that neither public nor private buyers pay less than MSP rates, whether sales take place within or outside mandis.
In actual fact, only a small percentage of farmers are able to sell to government at MSP rates, although Mr. Tomar claimed that procurement has shot up in both quantity and value terms under the BJP government. In 2019-20, 36% more wheat was procured by the government in comparison to 2013-14, with an 85% jump in value, according to data provided by the Agriculture Ministry. With regards to paddy procurement, there was a 114% hike in quantity over the same period, with a 192% increase in value.