Minimum Support Price (MSP) is a Necessity

Minimum Support Price (MSP) of farm produce has always been a controversial issue as higher MSP always meant higher cost of living for the salaried class and so higher inflation! And when urbanization in India has become more prominent than ever, high MSP becomes a political issue rather than being an economic matter. And over time, MSP which was brought in Indian economic policy making has become completely a political issue and its economic importance has been lost in political background!

But the question remains unanswered as to why India needs a regime of MSP when it is a very politically, socially as well as economically sensitive issue?

For salaried class and the populace living in urban centers, higher MSP simply means a costly thing for them for sure in form of inflation and taxes but on the other hand, for the farmers it is the only tool available to them to get somehow less than enough price for their products. People sitting in the cities and at urban centers may fail to understand this but this is the cruel truth about the agriculture sector in India.

At this point of time, we need to understand that Economics is not always Mathematics!

We know very well that farmers don't have pricing capabilities. Rather the buyers who are middlemen decide the prices of agriculture produce and these buyers fix prices on their own wishes rather than any economic sense. Farmers don’t have a market for themselves which works for them! All the efforts to bring that market in place by the Central Government through Farm Bills was snubbed by the political outfits of farmers leading their losses!

Just think If the farmers have pricing capabilities like other producers, would there have been any relevance of this MSP regime? This fact itself tells that they need to be supported through the MSP mechanism or some other regime. But MSP must not be used as a political tool which it is today!

Rajeev K. Upadhyay

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