Parliamentary Standing Committee Recommends Statutory MSP to Alleviate Farmer Distress

Parliamentary Standing Committee Recommends Statutory MSP to Alleviate Farmer Distress

Sub : Eco

Sec : Agri

• Committee advocates for Legally Guaranteed MSP:
  • The committee advocates for legally binding Minimum Support Prices (MSP) for crops.
  • This measure is seen as essential to safeguard farmers’ livelihoods, promote rural economic growth, and enhance national food security.
  • It stresses that the benefits outweigh the challenges, with long-term positive impacts on the agricultural economy.
• Doubling Financial Assistance Under PM-KISAN Scheme:
  • The panel recommends increasing the current annual ₹6,000 aid under the PM-KISAN scheme to ₹12,000 per farmer.
  • It suggests extending these seasonal incentives to tenant farmers and farm laborers, ensuring broader coverage and financial inclusion.
• Addressing Farmer Suicides:
  • A statutory MSP system is projected to significantly reduce farmer suicides by:
    • Providing financial stability and protection from market volatility.
    • Reducing debt burdens and improving mental health for farmers.
• Economic and Social Impact of MSP Implementation:
  • Economic Activity:
    • Statutory MSP is expected to stimulate economic activity in farming areas, benefiting local businesses and rural economies.
  • Investment in Agriculture:
    • With assured income, farmers are likely to invest in better farming practices, leading to increased productivity and sustainability.
  • Food Security:
    • Long-term investments and improved agricultural practices will contribute to the nation’s food security.

Minimum Support Price (MSP)

• MSP is a guaranteed price paid to farmers by the government for their produce, regardless of market fluctuations.
• Purpose:
  • Ensures remunerative prices for growers.
  • Encourages crop diversification to maintain a balanced agricultural ecosystem.
• Recommendations and Approval:
  • The Commission for Agricultural Costs and Prices (CACP), under the Ministry of Agriculture and Farmers Welfare, recommends MSP based on factors like:
  • Cost of production.
  • Market trends.
  • Demand-supply dynamics.
  • Inter-crop price parity.
  • Final approval is granted by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.

Crops Under MSP

• Mandated Crops:
  • 22 crops covered under MSP:
    • 14 Kharif crops (e.g., paddy, maize, bajra).
    • 6 Rabi crops (e.g., wheat, barley, mustard).
    • 2 commercial crops (jute, cotton).
  • Sugarcane Pricing:
    • Fair and Remunerative Price (FRP) is recommended for sugarcane.

Types of Production Costs Considered by CACP

• A2:
  • Direct costs incurred by farmers on inputs like seeds, fertilizers, pesticides, hired labor, leased land, irrigation, and fuel.
• A2+FL:
  • Includes A2 plus the imputed value of unpaid family labor.
• C2:
  • Comprehensive costs, including A2+FL, along with:
    • Rentals for owned land.
    • Interest on fixed capital assets.

CACP Usage:

• A2+FL is used to calculate returns.
• C2 serves as a benchmark reference for major producing states.

About Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) Scheme

• Direct Financial Support:
  • The Central Government transfers ₹6,000 annually to landholding farmers in three equal instalments of ₹2,000 each.
  • Funds are credited directly into beneficiaries’ bank accounts.
• Launch and Administration:
  • Introduced in February 2019.
  • It is a Central Sector Scheme with 100% funding from the Government of India.
  • Managed and implemented by the Ministry of Agriculture and Farmers Welfare.
• Identification of Beneficiaries:
  • State/UT Governments are responsible for identifying eligible farmer families.
  • Applicable to all landholding farmers, regardless of the size of their land.