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Modi govt’s MSP hike benefits only a handful of farmers

Krishnanand Tripathi
PM Modi, Wheat, Rice, Procurement, FCI, MSP, Minimum Support Price.

Minimum Support Price (MSP): Modi government’s decision to increase the minimum support price of more than 20 notified crops benefits only a handful of Indian farmers. According to the latest official data, only 35 lakh wheat-growing farmers and 95 lakh paddy growing farmers have received benefits of the government procurement in 2019-20 Kharif and Rabi marketing seasons. In the case of the farmers that grow pulses, the number of beneficiaries is just 75 lakh farmers in the country. While wheat-growing farmers whose crops were procured under the government’s minimum support price scheme account for less than 3% of the country’s total farmers, this number for paddy and pulse growing farmers is 7.64% and 6% of the total farmers of the country. According to beneficiaries of PM Kisan Samman Nidhi scheme, there are 12.5 crore farmers in the country and 80% of them, nearly 10 crore farmers are small and marginal farmers with landholding of less than 2 hectares.

In July 2018, Prime Minister Narendra Modi had approved an increase in MSP to take it to 150% of the cost of production. It was considered a major policy decision by the government in the election year, a move aimed at winning back his party’s support base among farmers. Under the new formula, the government had set the MSP of wheat at Rs 1,840 per tonne for the 2018-19 season and paddy at Rs 1,750 per tonne. It was estimated that the increased MSP would cost the government an additional Rs 15,000 crore.

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In 2018-19, the Union government procured 35.8 million tonnes of wheat and 44 million tonnes of paddy for its social welfare programmes and for maintaining the buffer stock of foodgrains in the country. This massive procurement is done through the Food Corporation of India with the help of concerned state governments. While some other Agri produce are procured through NAFED and procurement of cotton is administered through the ministry of textiles. However, the move only helps a small percentage of farmers in the country.

According to the latest official data, produce of only 78 lakh paddy farmers were procured by the government in the country in 2015-16 Kharif marketing season while for the next three years this number was 2016-17 (74 lakh) 2017-18 (72 lakh) and 2018-19 (95 lakh). The number of paddy growers whose produce was procured by the government last year was just 7.64% of the country’s farmers.

In the case of wheat farmers, this number is even smaller. In 2016-17, the government agencies procured wheat from just 20 lakh farmers, for the next three years, this number was 2017-18 (32 lakh), 2018-19 (40 lakh) and 2019-20 (35.6 lakh). Last year only 2.68% of the country’s farmers were beneficiary of the government’s wheat procurement programme.

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