“While there can’t be two opinions about the farmers’ plight in our country, increasing minimum support price (MSP) cannot be the solution. We may have to bring in science and our understanding to solve their problem,” Gulati said while participating in a panel discussion on a newly-released book, Farmers under Modi Raj: Double Income or Double Jeopardy, written by political scientist and social activist Yogendra Yadav and others.
The maximum of “higher the cost, higher the MSP” will only make farming an outlier, said Gulati, who is the Infosys Chair of Agriculture at the Indian Council for Research on International Economic Relations.
“If 50 per cent more than the C2 cost of produce (comprehensive cost, including the imputed cost of land rent) is given as floor price for all 23 commodities under MSP, there will be a crisis in the country,” he said, adding that on average the price differential between A2 + family labour (used for calculating MSP currently) and C2 is about 38 per cent.
According to Gulati, providing income support to farmers would be a better option than giving price support as it would not adversely impact the market. China, for instance, gave away $22 billion as income support to farmers on the basis of land the farmers owned, he said, adding that India could emulate the model.
Apart from global commodity prices, which are down 25 per cent from their peak in 2014, India’s pro-consumer policies and total disconnect of its trade policies are factors keeping prices of agri produce depressed. It is high time governments stopped distributing rice and wheat at 1 or 2 a kilo. This will automatically improve the conditions of Indian farmers, Gulati said.
Citing a study that ICRIER carried out, the noted agricultural economist said that even though India doesn’t tax agriculture, Indian farmers ended up paying 14 per cent tax on gross farm receipts in the last 17 years.
Earlier, opening the discussion on his book, Yadav said the current regime under Narendra Modi was the worst anti-farmer government that India has seen. Not only are its vision and deeds anti-farmer, even policy changes that it has been making have been putting farmers into more and more distress, Yadav said.
“Helping farmers in times of distress caused by natural disasters has been a tradition of all democratically elected governments at the Centre. The Narendra Modi government, on the contrary, told the court that it was not its responsibility but that of State governments’,” he said.
Gulati, however, disagreed with Yadav and said the NDA government was not anti-farmer by design. Though it had initiated some measures which it thought would benefit farmers, it didn’t have systems in place to implement them, he said. In the last one or two years, it took steps to have a relook on these initiatives, Gulati added.