Can MSP be implemented like MRP? Or will it go the diesel way?

New Delhi, Sep 23 (IANS)
As the farmer agitation intensifies, experts and activists view the new agricultural legislations as leading to privatisation of the sector and some say it is reverting to the pre-1965 days.
Avik Saha, Organising Secretary, All India Kisan Sangharsh Coordination Committee (AIKSCC) said the enormity of the issue is that it threatens the food security of 135 crore Indians and the income security of 70 per cent of the population connected with agriculture. AIKSCC has demanded that the government rescind the laws and minimum support price (MSP) be legislated as a guarantee.
In the interim, their demand is that the three Bills not be sent to the President for assent. MSP should be mandated like minimum retail price (MRP) across the country so that farmers have recourse in case of non-compliance, said Saha. So, the demand is to make MSP into a law like MRP. Farmers say that if MSP and ‘mandis’ go the diesel and petrol way, it will wreak havoc with retail prices and also lead to creation of monopolies.
They allege that the diesel and petrol costs and electricity charges by the BJP-led NDA government has directly increased cost of living drastically. Taxes on fuel have been raised by more than Rs 11 litre during Covid period and the new Power Bill, 2020 intends to withdraw all subsidies and charge all common consumers at Rs 10.20 per unit.
“The free market charade of bringing foodgrains under its purview is dangerous. The government is creating laws to create monopoly control and waging a war on food security,” Saha said. Noted agriculture economist and former Union Minister Yoginder K Alagh said, “The legislation is good, but we need to move towards its objectives. That is possible but COVID concerns, very legitimate, are a problem. If the Bills had been discussed, some of these concerns may have got some solution.”
Sucha Singh Gill, Professor, Centre for Research in Rural and Industrial Development (CRRID), Chandigarh said that the new laws will destroy APMC and ‘mandis’ and instead create private ‘mandis’ by paying more for a couple of years.
“The fact is that wherever government does not stand guarantee to buy, crop prices crash as is seen in maize, cotton and basmati where prices are lower than last year or below MSP,” Gill said referring to the prices in Punjab and Haryana for these crops. His view is that following these legislations, all crops will go the sugarcane way where farmers don’t get paid for years. This is reverting to the pre-1965 days when farmers never used to get much remuneration for the crops, he added.
“The government contention to keep MSP is a great bluff to divide the farmers. There is no act to enforce MSP and it is only a policy by the government without any obligation,” he said. “The farmers are fighting for survival. The government is acting under the pressure of WTO and corporate sector in India. This is the privatisation of procurement which will eventually lead to corporatisation of agriculture,” he added.
In a note, Motilal Oswal Institutional Equities said that the new Agriculture Bill will further shrink revenues of state governments (mainly Punjab/Haryana), especially the mandi tax. Punjab and Haryana levy 6 per cent and 4 per cent fee/taxes on their APMCs. These taxes are paid by the Centre to the states/APMCs. This year, if the paddy procurement takes place outside the physical jurisdiction of APMCs, the Centre can save this expenditure, the report said.
Rice exporters are not eligible for reimbursement of market fee and other taxes/levies paid to the APMCs. Hence, these Bills benefit rice exporters as they save market fee/taxes in states like Punjab and Haryana. In Uttar Pradesh (UP), many paddy procurement centres are outside of APMCs and it has to be seen if the UP government would treat this as a purchase in ‘trade area’ and whether it would be exempted from payment of 2 per cent market fee.
Chhattisgarh and Odisha are decentralised procurement (DCP) states in which the market fee is 2 per cent. Andhra Pradesh and Telangana are also DCP states, which have a market fee of only 1 per cent. Alagh said that the challenge is to maximise the growth impulse in agriculture and strengthen it as much as possible so that the deceralation in the economy is compensated for to the largest extent.
“Markets and price support are a focus of policy support. MSPs have been announced and market access is highlighted. This is important for the north west. In the rest of India, procurement prices are largely irrelevant,” Alagh said.
“India has the largest system of agricultural markets in the world. But what does a ‘market’ mean? Most agricultural trade takes place outside APMCs. The facilities are abysmal. In this period, we can do much to strengthen both the first stage agro processing infrastructure (supply chains) and functioning of markets,” Alagh said.

(Sanjeev Sharma can be reached at

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