Image for representation purpose only.
| Photo Credit: K.R. Deepak

The Minimum Support rices (MSPs) for both kharif and rabi seasons 2023-24 ensured a minimum return of 50% over the cost of production for all crops, said the Reserve Bank’s Annual Report released on May 30.

The overall public stock of foodgrains as on March 31, 2024 stood at 2.9 times the total quarterly buffer norm, the report said.

On November 29, 2023, the government extended the scheme of free distribution of foodgrains under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for five more years, effective from January 1, 2024.

The report, which is a statutory report of  Reserve Bank of India’s (RBI) central board of directors, noted that the agriculture and allied activities faced headwinds from the uneven and deficient South-West Monsoon (SWM) rainfall coinciding with strengthening El Nino conditions.

The overall SWM rainfall in 2023 (June-September) was 6% below Long Period Average (LPA) at the all-India level.

As per the second advance estimates, the production of kharif and rabi foodgrains in 2023-24 was 1.3% lower than the final estimates of the previous year.

Also read: Guaranteed MSP is an ethical imperative

The output of millets could benefit from productivity gains, the report said.

MSPs in 2023-24 were increased in the range of 5.3-10.4% for the kharif crops and 2.0-7.1% for the rabi crops.

Moong witnessed the maximum MSP increase among kharif crops, while the increase was the highest for lentils (masur) and wheat among rabi crops.

Prakash Kammaradi, Agriculture Economist, at a press conference in Mangaluru on Saturday, April 20.
| Photo Credit: H.S. MANJUNATH

The government should announce legally backed minimum procurement price for food crops and the Congress and the BJP, two major political parties contesting the Lok Sabha elections, should make their commitment on the same clear, former Chairman of Karnataka Agriculture Price Commission Prakash Kammaradi said here on Saturday, April 20.

Addressing presspersons, he said that there are 21 food crops. If the government was to purchase them by offering a minimum support price backed by the legislation, it might have to reserve ₹5 lakh crore per annum. The fund will not be a huge burden to the Union government.

He said that farmers have been demanding to offer the minimum support price for food crops with legal backing. The government should fulfil their demand.

The Congress has now promised that it will procure food crops by offering legally backed minimum support price (MSP). But it should become a reality if it forms the government. The Union government led by the BJP too has said that it is ready to procure cotton, jowar, and pulses by offering minimum support price. Its commitment to offering legally backed MSP should become clear, he said.

The commission headed by him submitted a report on the legally backed MSP to the government in 2018.

If the stock of food grains purchased by the government by offering MSP was in excess then the government can distribute the same among children and women suffering from malnutrition. A legally backed MSP scheme avoids the intervention of middlemen while farmers selling their produces, he said.

Amid the heat of the ongoing Lok Sabha electioneering, the Centre has announced plans to significantly increase wheat purchase from non-traditional States of Uttar Pradesh, Rajasthan and Bihar and set a target of seven-fold jump in procurement to 50 lakh tonnes in the ongoing 2024-25 marketing year.

Further, even as the ban on outbound shipments of wheat continues, “it will be a dream for us to export now”, Food Secretary Sanjeev Chopra told reporters on April 4.

“U.P., Bihar, and Rajasthan have been contributing much less than they could have. We are targeting total wheat procurement of 310 lakh tonne this year. Of which, we are hoping to procure at least 50 lakh tonne from three non-traditional procurement States alone,” he said.

While Uttar Pradesh, Rajasthan, and Bihar put together contributed only 6.7 lakh tonnes to the Central pool during the 2023-24 marketing year (April-March), the Union Food Ministry has decided to procure 16% of the total wheat procurement target of 310 lakh tonne set for 2024-25. Wheat procurement at Minimum Support Price (MSP) is normally undertaken by the Centre’s nodal agency Food Corporation of India (FCI) and State agencies. However, cooperatives Nafed and NCCF have also been roped in with a procurement target of five lakh each this year.

Wheat MSP has been fixed at ₹2,275 per quintal for the current year. Since October, the Centre has been working with these three States to increase the procurement level. “Various steps have been taken to address the gaps and it should help boost procurement levels in three States,” he said.

Asserting that 2024 general elections is unlikely to affect wheat procurement operations, the Secretary said the increase in wheat procurement from non-traditional States will help restore allocation of wheat under the Pradhan Mantri Garib Kalyan Anna Yojana and other welfare schemes.

“The allocation of wheat has been reduced to 184 lakh tonnes annually from the previous 230-240 lakh tonnes under various welfare schemes in view of lower procurement in the last two years,” he added.

Mr. Chopra also said the Centre has not directed traders to avoid buying wheat from farmers till the government completes procurement. “No such instruction has been given to traders,” he added.

Highlighting steps taken to strengthen wheat procurement in non-traditional States, the Secretary said the procurement window has been advanced/extended to March instead of April 1, set up a dedicated farmer helpline to address procurement-related queries, intensified media publicity of MSP rate, and drying facilities have been provided for early harvested crop.

Besides, the government has advanced farmer registration from January 1 instead of March 1, simplified farmers’ land record verification, including tenant farmers, given flexible procurement targets to agencies.

More importantly, the Secretary said the government has decided to ensure transfer of MSP to bank accounts of farmers within 48 hours, streamlined procurement incidental burden for farmers, smoothened banking-related issues such as Aadhaar integration with bank accounts.

“The government has also opened more procurement centres targeting production hotspots, set up mobile procurement centres, decide to leverage Self Help Groups, Panchayats, Farmer Producer Organisations,” he said.

“That apart, the government has ensured institutional preparedness through working capital to agencies to ensure payment of MSP to farmers within 48 hours,” he added.

The Secretary further mentioned that a Central control room has been set up in the FCI headquarters in Delhi for real-time monitoring of procurement ad coordination among various agencies.

According to the Food Ministry, six lakh tonnes of wheat have already been procured so far this year from six States — Uttar Pradesh, Madhya Pradesh, Rajasthan, and Bihar. The procurement from traditional States of Punjab and Haryana will begin soon.

On prices of wheat and rice, the Secretary said wheat flour and wheat prices are stable at present after introduction of retail sale of wheat flour at ‘Bharat’ brand. About 7.06 lakh tonne of wheat flour has been sold till now.

“Even retail inflation of rice remained stable at 13% and 14% for the last two months. About 3.1 lakh tonne of FCI rice has been sold under Bharat brand since February,” he added.

Asked if the government will revisit the wheat export ban amid estimates of higher production, the Secretary said, “It’s a dream for us to export now.” The government has banned wheat exports since May 2022 to boost domestic availability and check prices.

The wheat production is estimated to be a record 112 million tonne during 2023-24, compared to last year’s 110 million tonnes as per the Agriculture Ministry.

The perennial issue of fair pricing of farm produce reigns supreme, now coupled with calls for legal assurances of Minimum Support Price. File
| Photo Credit: PTI

As the general elections draw closer, agrarian concerns have once again taken centre stage. Farmers from the heartland of the Green Revolution have travelled to the border of the capital to not only voice their distress, but also to shape the electoral discourse. The ruling dispensation, sensing adverse electoral implications, attempted to reach out to the farmers. It said it was ready to procure pulses, maize, and cotton at MSP, but this was contingent upon farmers guaranteeing crop diversification. However, these efforts were rejected as the core issues were not addressed, say farm leaders.

The perennial issue of fair pricing of farm produce reigns supreme, now coupled with calls for legal assurances of Minimum Support Price (MSP). However, beyond mere legal mandates lies the pressing concern of maintaining self-sufficiency in food production and addressing the ongoing challenge of distribution. This underscores the ethical imperative of anchoring a legal guarantee for MSP.

The MSP regime was a vital instrument for ensuring food security in India. Given the unique nature of agriculture, farmers lack the ability to exert significant influence, let alone determine the price of their produce. This constitutes a ‘market failure.’ Thus, MSP ensures that agricultural commodity prices remain above a predetermined benchmark to facilitate remunerative price discovery.

Produce and perish trap

The MSP is announced annually for 23 crops covering both the kharif and rabi seasons, well in advance of sowing, with 21 of them being food crops. However, despite the announcements, the implementation of MSP remains poor. Only 6% of farmers, primarily those cultivating paddy and wheat in States such as Punjab, benefit from MSP. Most transactions involving these essential food commodities occur below the MSP, rendering farming economically unviable for the majority of producers in India. As a result, farmers are trapped in a dangerous cycle of produce and perish, leading to crippling debt and deaths by suicide. All these emphasise the pressing need to ensure MSP, including the one recommended by the eminent agricultural scientist M.S. Swaminathan (with a 50% profit margin).

Several articles under the Constitution, as well as the United Nations Declaration on the Rights of Peasants, support the legal recourse to guaranteeing MSP. According to a recent opinion survey by an English TV channel, 83% of landowners and 77% of farm labourers expressed solidarity with the agitating farmers. Notably, 64% of the public also endorsed the farmers’ demand for a legal right to MSP.

Sugarcane growers already benefit from a ‘statutory’ MSP, which sugar factories strictly adhere to when purchasing cane from farmers. A few years ago, Maharashtra attempted to amend its Agricultural Produce Market Committee (APMC) Act to prevent the purchase of agricultural produce below MSP, but the effort failed due to a lack of political will and a comprehensive strategy. The Karnataka Agricultural Price Commission has laid out a clear roadmap, including potential financial commitments, to ensure a legally binding MSP for crops cultivated in the State. A private member bill on The Farmers’ Right to Guaranteed Remunerative MSP for Agricultural Commodities was tabled in Parliament in 2018. The Andhra Pradesh government unveiled a draft bill last year aimed at guaranteeing MSP for crops grown in the State. These efforts show that the objective of establishing a legal recourse to MSP has not emerged suddenly, nor is it impossible to attain.

The solution

A minor amendment to respective State APMC Acts or the Centre’s Essential Commodities Act would suffice to introduce a law ensuring that no transactions of farmers’ produce occur at prices below the MSP. The budget outlay will not be as large as projected if legal recourse to MSP is accompanied by essential backward and forward linkages. Crop planning, market intelligence (including price forecasts), and other pre-sowing measures, along with the establishment of post-harvest infrastructure for efficient storage, transportation, and processing of farm commodities, greatly assist in managing the post-harvest glut in the market. Therefore, a legal route to MSP, complemented by the development of such linkages, would provide protection against “market failures” in addressing the surplus, rather than leading to “market distortion,” as claimed by some mainstream economists.

Even enhancing MSP to provide a 50% profit margin over total cost is not challenging, considering that current margins already stand at around 22%. Finally, effective procurement and distribution, as envisaged under the National Food Security Act, 2013, is the most appropriate means to not only ensure MSP but also address hunger and malnutrition.

The PM-AASHA comprises schemes for price support and price deficiency payment, along with incentives to private traders to ensure MSP. While it possessed all the necessary elements as precursors to guarantee the MSP, its side-lining in policy circles highlights how political expediency rules the roost.

At present, farmers hardly get 30% of the price paid by the consumers; this will increase if MSP is guaranteed. Establishing a legally binding MSP will anger intermediaries as their share will get reduced. Often, government intervention, and particularly a legally binding MSP, is deemed a problem. It is this adherence to free market dogma that is preventing a just solution to the ongoing crisis in farmer incomes.

T.N. Prakash Kammardi is an agricultural economist and former chairman, Karnataka Agricultural Prices Commission, Government of Karnataka

Are the protests for a legalised MSP justified?

Lakhwinder Singh: These protests have been building up over time. In 2018 too, we saw tens of thousands of farmers from Maharashtra take to the streets. But their demands are perhaps not being listened to seriously, whether by State governments or the Central government.

Watch |What is Minimum Support Price?

There is a context to this. India introduced economic reforms in 1991 with a promise that we will soon become industrialised and the rural workforce will move from the agricultural to the industrial sector. More than 30 years later, agriculture has been squeezed in many ways but no one is talking about this agricultural crisis.

One of the most important demands of the farmers protesting this time is a legal guarantee for MSP. The public distribution system (PDS) gave support to farmers and ensured national food security. Now, India is expected to shift from food security to nutrition security. A legal guarantee for MSP for 23 crops is perhaps the way to do this. The farmers also want India to exit the WTO. We are in a phase of de-globalisation. When we have food shortages, for instance, the government imposes a ban on exports of food items (in defiance of the WTO). In a way, the demand of the farmers is in consonance with what the government does.

Also read | ‘MSP guarantee can nudge farmers to diversify beyond paddy and wheat, bolster incomes and consumption’

Siraj Hussain: The farmers are rightly concerned about the low prices of various crops. But their demands will not be accepted by any government in a hurry. We need a detailed, thorough review of agricultural trade policies and production and also what will happen to agriculture in the next 20-25 years.

After the 2020-21 protests, the government took seven months to set up a committee to look into this issue of MSP. More than a year and a half later, the committee has not even submitted an interim report.

Also read | Legal guarantee for MSP will make farmers drivers of GDP growth: Rahul Gandhi

Should MSP on all these crops be legalised? And will MSP survive without public procurement?

Siraj Hussain: The mandi system in the form of APMCs (agricultural produce market committees) is functional only in a few States. In most others, it is not functional. Less than one-third of the crop production in India is traded through mandis; the rest is sold by marginal farmers to village traders. So, even if MSP becomes legalised, it will be difficult to implement it because there is no record of who is buying and selling and at what rate. The government cannot be buying all the 23 crops – even for wheat and rice it faces lot of difficulties in procurement.

Lakhwinder Singh: Legalisation of MSP is in national interest. A large number of farmers sell commodities in informal markets. The government wants to make transactions digital and formal, so this is in consonance with the government’s aim. Also, the gross fixed capital formation in the agricultural sector after the 1991 reforms has gone down tremendously. Farmers are in distress. Legalising MSP is the answer. Let me add that the government is not expected to buy all the 23 crops. But if at least 5-10% of the produce is purchased, it would be a marginal intervention and stabilise the prices.

Editorial | Farming consensus: On the government and the farmers on protest

Is it possible to extend the MSP system to the entire country, especially for subsistence farmers, as the government claims?

Siraj Hussain: Yes. Madhya Pradesh, Chhattisgarh, and Odisha have shown that the procurement system can be expanded. Even in Bihar, West Bengal, and Tamil Nadu, procurement of rice has increased over the last few years. But that is not the question. The question is whether the government should be procuring so much. It has been procuring 50-60 million tonnes of rice. Is that a good policy regime? The root cause is PDS and now the government has made it free. That means that the government will continue to procure large quantities of wheat and rice.

Another concern is that legalised MSP will result in high prices affecting the consumers.

Siraj Hussain: I do not think it is possible for any government to procure all the commodities. It is not possible for the government to fix an MSP for everything. The basic question is how to ensure a remunerative price to farmers. My view is that it should be a State by State policy. Every State has a different regime. In Punjab, for instance, a price payment deficiency system is possible because the mandi system is well developed and the distance between two mandis is only 6 km, whereas at the all-India level it is 12 km. The States and the Centre should be talking to one another. Experts have to come up with a policy which will ensure that farmers receive a fair and remunerative price.

Where is the farmers’ protest heading? | In Focus podcast

Another question which you should be asking macroeconomists is on food inflation. The government must also look after the interests of consumers. They have to try and balance the policies of import, export, and domestic MSP.

Lakhwinder Singh: When the government is not interested in legalising MSP and intellectuals are not interested in discussing these issues, fear is created among consumers that they are going to be fleeced. And a binary is created of farmers and consumers. The government is an intermediary, which has to protect the rights of both consumers and producers.

In Frames |Farmers’ protests 2024

The most striking issue is food inflation. The local prices at which farmers are selling their produce are very low and do not cover the major costs involved (in production). On the other hand, consumers are facing huge price rise. Legalising MSP will reduce inflation, protect consumers, and give a relatively reasonable income to the farmers.

Also, regulating markets is important. The government has withdrawn from the regulatory mechanism and therefore in unorganised markets, intermediaries are active and creating inflationary pressures on the economy.

Farmers are also worried about input cost calculation methods such as A2+FL and C2+50%. What could be the best mechanism to calculate the input costs?

Lakhwinder Singh: The idea of C2+50% cost has come from industry. Agriculture requires remunerative prices. I think the C2 estimation of costs for agricultural crops is going to be almost comparable with other prices which we have in various sectors of the economy.

Siraj Hussain: There have been several suggestions, including a report by Dr. Ramesh Chand, about certain changes in the methodology of calculating the cost of cultivation. Those changes have not yet been decided. The problem is whatever price you fix, you are not able to ensure the A2+FL price. Sometimes, the price is so low that it is below the cost of cultivation.

Also read | Don’t consider our discipline and preference for dialogue as weakness: RSS farmers body tells government

The answer is not easy to find. The government cannot be deciding the prices of every agricultural commodity. Many farmers and organisations prefer selling to corporates because there used to be a lot of glut of at one point of time. Now, at least there are some large buyers. So, we can’t say that corporates should be completely prevented from purchasing and storing agricultural commodities.

Are cooperatives an alternative to help farmers?

Siraj Hussain: Cooperatives have been successful in certain sectors. For example, in the milk sector, they brought the White Revolution in Gujarat. It was due to the failure of cooperatives that the government came up with the idea of farmer-producer organisations (FPOs). Now, we are going back to cooperatives. Any form of aggregation which can help the farmers in realising better prices is welcome. But both cooperatives and FPOs have been captured by influential vested interests in rural areas. If cooperatives can create storage structures where the farmers can store their produce at reasonable prices to reap the benefits of higher prices in the off season, they are welcome.

Lakhwinder Singh: When we have to look for alternatives, we cannot rely on a single intervention. If you want to promote cooperatives, bring in a law and storage capacity. Government-supported cooperatives have failed because of corruption. This organisation has a future, but we need a legal framework within which they can flourish. And they need supportive infrastructure.

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Union Minister Anurag Thakur addresses the media during cabinet briefing, in New Delhi, on Oct. 18, 2023.
| Photo Credit: PTI

Ahead of assembly polls in key wheat growing states, the government on Wednesday announced an increase in the minimum support price (MSP) of wheat by ₹150 to ₹2,275 per quintal for the 2024-25 marketing season.

This is the highest increase by the Narendra Modi-led government since it came to power in 2014.

Also read: Explained | Will a hike in MSP help farmers?

A decision in this regard was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Modi.

Currently, the MSP on wheat stands at ₹2,125 per quintal for the 2023-24 marketing season (April-March).

Briefing media, I&B minister Anurag Thakur said the CCEA has approved the increase in the MSP for all mandated rabi crops for 2024-25 marketing season.

“Based on the CACP recommendation, we have increased the MSP of six rabi crops. Wheat MSP has been increased by ₹150 per quintal,” he said.

Also read: Explained | What will a legal guarantee of MSP involve?

The support price of wheat has been increased to ₹2,275 per quintal for 2024-25 marketing season, from ₹2,125 per quintal in 2023-24, he added.

Wheat is the main rabi (winter) crop, sowing of which begins in October, while harvesting in April.

MSP is the minimum rate ensured to protect the interest of farmers and below this rate the grain is not purchased by the government procurement agencies.

“In case of any shortfall in production of any crop, prices can increase at a faster rate and add to inflation.”
| Photo Credit: MOHD ARIF

The inflationary impact of the 5%–11% increase in the minimum support price (MSP) for farm produce will be an additional factor for the RBI’s Monetary Policy Committee (MPC) to consider in its ongoing bi-monthly policy review to be announced on Thursday.

The spillover effects on consumer food prices from higher assured remuneration to farmers will hinge on the government’s procurement strategy for foodgrains and prevailing market prices, but any production shortages could lead to higher prices, economists cautioned. 

For instance, the 7% increase in paddy MSP could lead to higher prices if the crop is not higher than last year’s output, said Bank of Baroda chief economist Madan Sabnavis, who termed the increases in MSP ‘quite aggressive’ relative to past increases, which had been in the 4% to 6% range.

“Procurement takes place for rice, whose inflation is already high at 11%,” noted Mr. Sabnavis. “So an increase of 7% will add to benchmark prices in the market. Similarly, jowar, bajra and maize are all running inflation of 13%-15% and hence, also run a risk of higher prices in case of crop failure in any part of the country,” he added.  

“In case of any shortfall in production of any crop, prices can increase at a faster rate and add to inflation. The crux will hence be the size of the crops this season,” he said, stressing that food prices are the major risk to inflation so the Reserve Bank of India will be cautious until there is more clarity on kharif crop prospects. 

State Bank of India economists said that the impact of higher MSPs on inflation “will be negligible” depending on the prices prevailing in the e-National Agriculture Market (e-NAM) as well as procurement levels. 

While procurement of cereals was primarily in terms of wheat and rice, the procurement of pulses was not much, noted SBI Group chief economic advisor Soumya Kanti Ghosh. Moreover, he pointed out that the average modal prices in e-NAM mandis were already higher than the MSP for some of the crops. 

File photo used for representational purposes only. The Union Cabinet approved a ₹143 hike in the MSP of paddy to ₹2,183/quintal for 2023-24.
| Photo Credit: Nagara Gopal

The Centre has set the Minimum Support Price (MSP) for paddy sown in the kharif or monsoon season at ₹2,183 per quintal, a hike of ₹143 per quintal in comparison to last year. The 2023-24 MSPs for 17 kharif crops and variants were approved at a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, .

The sowing of the crops, mainly paddy, has started in most States. While the Centre said that its aim was to ensure reasonably fair remuneration for the farmers and to encourage crop diversification, several farmers’ organisations said that the increase was not in tune with rising input costs.

Also Read | An MSP scheme to transform Indian agriculture

‘Highest increase’

Food Minister Piyush Goyal told reporters after the CCEA meeting that farmers will benefit from the increase in the MSP at a time when the retail inflation is declining. “In agriculture, we have been fixing MSP from time to time based on the recommendations of Commission for Agricultural Costs and Prices (CACP). The increase in MSP of the kharif crops for this year is highest compared to the previous years,” he said.

Apart from paddy, new MSPs have been set for major pulses. The MSP for moong is ₹8,558 per quintal, an increase of ₹803 from last year, one of the highest increases among kharif crops. The MSP for tur or arhar has been set at ₹7,000 per quintal, which is estimated to be 58% above the cost of production. This is in keeping with the Centre’s promise to set MSPs which are at least one and a half times the all-India weighted average cost of production.

Bajra, tur margins high

“The expected margin to farmers over their cost of production are estimated to be highest in case of bajra (82%) followed by tur (58%), soybean (52%) and urad (51%). For the rest of the crops, the margin to farmers over their cost of production is estimated to be at least 50%,” said an official statement.

The MSP of ‘A’ grade variety of paddy has been increased to ₹2,203 per quintal from ₹2,060. For jowar (hybrid) and jowar (maldandi) the rates are ₹3,180 and ₹3,225 per quintal respectively. Last season, it was ₹2,970 and ₹2,990. For maize, the increase is ₹128 per quintal and the new rate will be ₹2,090. For ragi, this year’s MSP will be ₹3,846 per quintal, which is an increase of ₹268.

Among oilseeds, the MSP for sesamum is ₹8,635 per quintal, ₹6,377 for groundnut, and ₹4,600 for soybean. In the case of niger seed, the new MSP is ₹7,734 per quintal, and for sunflower seed, it is ₹6,760. For cotton (long stable) and cotton (medium stable), the MSPs are at ₹7,020 per quintal and ₹6,620 per quintal respectively.

‘Faulty production estimates’

The Samyukt Kisan Morcha, a platform of about 500 farm outfits, questioned the Centre’s claims and said that the new MSPs were not linked to the real expenses of farming. Senior SKM leader Ashok Dhawale said that the MSP for kharif crops is nowhere near the C2+50% formula proposed by the Swaminathan Commission.

“The cost of production estimates given by the government are themselves extremely faulty and underrated, and thus the MSP figures are also very unsatisfactory. The SKM and All India Kisan Sabha express anger at the constant short-changing of farmers by the BJP regime led by Narendra Modi, and vow to intensify their struggle for a fair and just MSP, which can only be won by changing the current BJP government in the general elections next year,” he said in a statement.

Senior farm leader Hannan Mollah said that the Centre has not taken into account the increase in irrigation costs and fertiliser costs. “The government has betrayed the farmers by announcing MSP far below C2+50%. It has not put up the ‘Report on Price Policy of Kharif Crops for 2023-24 Season’ by the CACP yet,” he added.

A farmer spreads fertilizer in a field, at a village in Madurai.
| Photo Credit: PTI

Globally, there is a twin crisis in agriculture: in food and in fertilizers. On the one hand, there are fears of a fall in the global production and availability of food. The rise in food inflation has been an area of serious concern for the government and the Reserve Bank of India. On the other, global fertilizer prices have risen by about 200% over the past two years. Consequently, the prices of fertilizers and other farm chemicals in India have also shot up.

Domestically, the Union government has the unenviable task of explaining why it failed to double the real incomes of farmers between 2015 and 2022. Official data show that real incomes from cultivation have fallen in absolute terms after 2015. Between 2020-21 and 2022-23, annual growth rates in agriculture and allied sectors have been stagnant between 3% and 3.5%. Agricultural exports have risen, but the impact of this has been insignificant outside a handful of commodities.

Thus, the objectives of the Budget could be formulated as two-fold: one, it must have protected farmers and consumers from the food and fertilizer crises; and two, it must have taken steps to raise net incomes from cultivation.

Disappointing allocations

It was widely expected that food and fertilizer subsidies would be retained or increased. The restructuring of the food distribution guidelines, which effectively ended a part of the free supply of food grains under the Pradhan Mantri Garib Kalyan Anna Yojana, was a disappointment even prior to the Budget. The Budget has reaffirmed that stance and cut food subsidy from ₹2.87 lakh crore in 2022-23 (RE) to ₹1.97 lakh crore in 2023-24 (BE). Fertilizer subsidies have also been cut from ₹2.25 lakh crore to ₹1.75 lakh crore. In effect, these cuts will expose farmers to the vagaries of the global market and render the economics of agriculture more fragile. Landless households in rural areas are also likely to be affected adversely, as the allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme has been cut from ₹73,000 crore in 2022-23 (BE) to ₹60,000 crore in 2023-24 (BE).

The cut in fertilizer subsidies will increase the costs of cultivation for farmers, but there is no amelioration to be expected from a compensatory rise in output prices. The rise in minimum support prices between 2020-21 and 2021-22 just covered for the rise in input costs and did not leave any space for higher net incomes.

Editorial | A raft of concessions amid consolidation: On Budget 2023-24

There has been no solace on the production front too. Yields in agriculture remain low. Rising fertilizer prices have led to lower consumption of fertilizers in farms, leading to imbalanced nutrient application and even poorer prospects of yield rise. The government, on the other hand, has been promoting variants of “natural farming”. The Budget has even allocated ₹459 crore to a new National Mission on Natural Farming. But natural farming has no scientific validation and is likely to reduce crop yields by 25-30%. If yields fall, how can farming stay viable in the face of rising input prices and stagnant output prices?

Capital expenditure

Amidst all the talk of raising capital expenditure, agriculture presents us with a story of utter neglect. Capital investment is required in agriculture not just for irrigation but also to build/improve agricultural markets (mandis). The total capex of the government in 2022-23 was ₹7.5 lakh crore, but allocation under the capital accounts of crop husbandry, animal husbandry, dairy and fisheries was just ₹119 crore. In 2023-24, this is expected to fall to ₹84.3 crore. Under the capital account of irrigation and flood control, the budgeted allocation in 2022-23 was only ₹350 crore, which is slated to fall to ₹325 crore in 2023-24. The Agriculture Infrastructure Fund (AIF) is another much-touted scheme. The budgeted allocation for AIF in 2022-23 was ₹500 crore, of which only ₹150 crore was spent. In 2023-24, the allocation of ₹500 crore has been retained.

The Finance Minister made a series of other announcements on agriculture in her speech, but the allocations for these schemes or scheme components are not listed in the Budget documents. Essentially, all these are fragmented allocations thinly spread across diverse departments with only an indirect or marginal impact on the agricultural sector. Good examples are the Agriculture Accelerator Fund, PM-Pranam, GOBARdhan, Bhartiya Prakritik Kheti Bio-Input Resource Centres, Mishti, and Amrit Dharohar. There was much time spent in the speech on millets too, but without any explicit allocation other than in upgrading a Centre for Excellence in Hyderabad. There was yet another announcement on a targeted investment of ₹6,000 crore under the Pradhan Mantri Matsya Sampada Yojana, but the actual increase in allocation in the Budget papers is only ₹ 121 crore.

The Budget fails to address the most pressing problems in Indian agriculture. The lack of a scientific and grounded vision, which must have ideally driven the quantum and direction of allocations, is telling.

R. Ramakumar is Professor at the Tata Institute of Social Sciences, Mumbai

The MSP for medium staple cotton for 2022-23 kharif season is ₹6,080.
| Photo Credit: Nagara Gopal

While cotton farmers in several States have demanded an increase in the minimum support price (MSP) of the crop, the Centre has said that it is “watching” the cotton production scenario and decide accordingly.

A senior official of the Union Textile Ministry told The Hindu that the domestic prices right now are higher than the MSP of cotton. “MSP operations will kick in if prices fall. At this point, it is not necessary. We are fully ready to come into MSP,” the official said, adding that the Cotton Corporation of India will also start procurement if the market is unable to ensure MSP for cotton.

The MSP for medium staple cotton for 2022-23 kharif season is ₹6,080. Though farmers said they got prices much higher than MSP for their produce, it was inadequate given the rise in price of input items such as seeds, pesticides and fertilisers.

For Praful Khandhadia, a cotton farmer from Rajkot, the fortunate absence of pink bollworm — a major menace — meant a comfortable production, he had to contend with other problems.

“The income from cotton was not good in the last four years. So I have not cultivated cotton on about 60% of my land. Sowing was less, but the production was good. The harvest is going on. It will be over by mid-February,” he said.

Mr. Khandhadia is able to get ₹8,500 per quintal at present. “It is higher than the MSP. Last March, some farmers got even ₹15,000 per quintal but the production was very less. Given the increased input cost, the MSP should be at least ₹10,000 per quintal. We are selling the crop for ₹8,500 because of our immediate household and farm requirements,” he said.

Harvest of cotton is over in Punjab. In Fazilka, a major cotton belt in Punjab, farmers are getting about ₹8,200 per quintal on average. “The production was just three quintals on average for an acre here. We used to get at least 15 quintals from one acre. We have been demanding compensation for cotton farmers. The seed-supplying companies are the major culprits for our losses. They should be held liable for supplying bad-quality seeds. Cotton is a cash crop for us. Our lives are dependent on this. But the companies are looting us,” Gurbhej Rohiwala, Bharatiya Kisan Union (Ekta-Ugrahan) Fazilka district president, said.

In Maharashtra, some farmers have got as much as ₹12,000 per quintal, Ajit Nawale, All India Kisan Sabha’s Maharashtra secretary, said. However, some have had a low production because of the pink bollworm attack

“The prices are good because of the global situation. The import has decreased and that is the reason why farmers are getting good prices. We have been demanding that cotton import should be banned at any cost. Along with this, cotton seeds import should also be stopped. Cotton seeds too have good demand and price as it is used as cattle and poultry feed,” he said.