Why guaranteeing MSP is essential for farmers and India

The issue of guaranteeing Minimum Support Price (MSP) for crops has gained significant attention, especially amidst growing concerns over farmer distress, groundwater depletion, and the rising cost of food imports. Experts argue that guaranteeing MSP would benefit farmers, address environmental issues, and reduce India’s dependency on foreign imports.

Necessity of MSP Guarantee

• Farmer Distress and Suicides: The lack of fair MSP has contributed to immense financial distress among farmers, leading to a troubling rise in farmer suicides. Reports indicate nearly 7,00,000 farmer suicides in the past three decades, with many farmers unable to recover costs due to low market prices for their crops.
• Impact on Groundwater and Crop Diversification: In states like Punjab, where rice and wheat farming is predominant, MSP guarantees for 23 crops could encourage diversification, which would help conserve vital groundwater resources. Diversified farming would also allow farmers to grow more profitable crops, reducing reliance on water-intensive rice.
• Economic and Health Benefits: Guaranteeing MSP would also help reduce India’s dependency on oil and pulses imports, saving nearly Rs 2 lakh crore annually. Additionally, reducing reliance on imported oils like palm oil, which has health concerns, would improve public health and strengthen the nation’s agricultural sector.

Issues with Current MSP Implementation

• Discrepancy Between MSP and Market Prices: In many states, despite MSP being set for crops, farmers are forced to sell their produce at significantly lower prices due to insufficient government procurement. For example, in states like Bihar, Uttar Pradesh, and Rajasthan, farmers often sell their paddy below the MSP, leading to massive financial losses.
• OECD Report on Farmers’ Losses: An OECD report highlights that farmers have incurred nearly Rs 60 lakh crore in losses due to the government's failure to enforce proper MSP. In 2023 alone, the country lost Rs 14.72 lakh crore due to inadequate MSP support, exacerbating the debt crisis among farmers.
• Unfair Financial Burden on Farmers: The gap between the MSP and the actual market price results in increasing farmer indebtedness, with many farmers falling deeper into debt each year. The government’s failure to ensure fair MSP contributes directly to this worsening financial situation.

Potential of Guaranteed MSP for National Development

• Boosting National Agricultural Resilience: Guaranteeing MSP would strengthen India's agricultural sector, helping it become self-sufficient in oilseeds and pulses. Punjab, for instance, has the potential to diversify and produce a variety of crops, reducing the need for imports and contributing to food security.
• Low Cost of Guaranteeing MSP: The cost of guaranteeing MSP for crops is significantly lower than the amount spent on oil and pulses imports, estimated to be around Rs 20,000 to Rs 50,000 crore. This cost is a small price to pay for stabilizing the agricultural sector and ensuring long-term food security for India.
• Environmental and Social Benefits: A guaranteed MSP would also reduce electricity consumption in agriculture by promoting crop diversification, contributing to lower electricity costs for households. Additionally, it would protect groundwater resources, benefiting both agricultural and non-agricultural sectors in the long run.

Practice Question

Q. Discuss the importance of guaranteeing Minimum Support Price (MSP) for crops in India. How would its implementation help in addressing farmer distress, environmental concerns, and national economic stability?