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MSP, Market Avenues and More – The New Shape and Narratives of Agriculture Economy

MSP, Market Avenues and More – The New Shape and Narratives of Agriculture Economy

It is apparent that the opposition and Congress have not succeeded in shaping a nationwide protest against recent farm laws. Apart from Punjab, in which the ruling-Congress seems to have spent considerable resources to spread misinformation on recent reforms, the rest of the country does not seem to be buying opposition’s narrative.

Nevertheless, the debate over the issue has generated some discussions around Minimum Support Price, the state of agriculture markets etc. This is a good time to take a look at how the policy and actions have taken shape on this front in the last six years.

MSP - Swaminathan Committee’s Recommendation Implemented

Swaminathan Committee’s recommendation regarding fixation of MSP was implemented i.e. at least 50% profits on cost of production.

The Commission submitted its reports between 2004-06, the party which was in power from 2008-2014 did not take any concrete action based on the recommendations, but is now, often seen holding placards and sloganeering against the present government for being “anti-farmer”.

Swaminathan acknowledged the steps taken by the Modi government in his article in 2018, where he wrote, “although the NCF report was submitted in 2006 very little action was taken until the present government headed by Prime Minister Narendra Modi took office. Fortunately, over the last four years, several significant decisions have been taken to improve the status and income of farmers.”

More Allocations for Agriculture

Agricultural Budget during 2020-21 is Rs 1,34,399 crore as against Rs 12,000 crore during 2009-10. If it is clubbed together with the allocations to rural development the amount reaches to Rs 2.83 lakh crore.

Agri Infra Fund and FPOs

Rs 1 lakh crore Agri Infra Fund under Atmanirbhar Bharat package and the creation of 10,000 Farmers Produce Organisations (FPO) across India together are shaping the future of agriculture markets. The FPOs help in the unification of small and marginal farmers, giving them the collective strength to deal with issues of technology, quality control and financing.

The Agriculture Infrastructure Fund is a medium to long term debt financing facility. It works on post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee. The duration of the scheme is from FY2020 to FY2029 (10 years). Under the scheme, Rs. 1 lakh crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum and credit guarantee coverage for loans up to Rs 2 crore. The beneficiaries will include farmers, Marketing Cooperative Societies, FPOs, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects.

PM Kisan – Timely Support for Farmers

Through PM Kisan Samman Nidhi, more than 10 crore farmers have been benefitted. More than Rs 94,000 crore have been transferred to farmers through DBT. During Covid pandemic more than 9 crore farmers were provided with over Rs 38,000 crore under PM Kisan.

Freeing Farmers from the Clutches of Moneylenders

When farmers do not get timely loans from the financial institutions, they head towards local moneylenders who charge exorbitant interests and exploit farmers.

Modi government destabilised this vicious trap by extending Kisan Credit Cards. In the last 6 months, 1.29 crore new KCC cards have been given. Since February 2019 fisheries and animal husbandry farmers are also given the benefit of KCC card.

Online Market

The online avenue of markets helps farmers by giving more scope for them to find larger market for their produce and secure a competitive price. eNAM mandis increased from 585 to 1,000 during Covid pandemic lockdown period more than Rs 1 lakh crore worth trade has happened on the eNAM platform.

Now with the recent farm reforms, more opportunities will open up as the farmers are free to sell their products to anyone, not necessarily to the local market.

Increase in the Sowing Area

The increase in the sowing area indicates the farm sector’s positive sentiment. Summer sowing this year 57 lakh ha which is more by 16 lakh ha compared to last year. Kharif season sowing this year of 1,104 lakh ha is way more than the record kharif season sowing of 2016 which was 1,075 lac ha.

You may read our earlier piece How to Be Upbeat Amidst Crisis – Indian Farm Sector Shows the Way in a Pandemic Year to further know about the trend.

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