Farmers’ protest over farm bills: Let’s decode MSP puzzle?

In September this year, the Narendra Modi government increased the Minimum Support Price (MSP) for rabi crops. In June, the central government hiked MSP of 14 kharif crops. Before that in October last year, the government had announced an increase in the MSP for rabi crops.

Still, the thousands of farmers are sitting at the Delhi borders for a week seeking a guarantee that the government will not end the MSP regime. The single-most worry on their mind is that the new farm laws, passed by Parliament in September, would ultimately do away with the MSP regime, they are familiar with for selling their crops at a guaranteed price.

The government’s verbal assurance has not soothed their edgy nerves. Farm distress is a reality in the country.

Four rounds of talks have happened. Two of which involved a three-minister panel of the government and a few dozen representatives of the farmers’ unions. At least one more round-table conference will take place on Saturday.

Photo: PTI

Different farmers’ unions have slightly different demands ranging from total withdrawal of the three farm laws to a written guarantee that the MSP regime will not be dismantled. The MSP, however, remains the core issue. So, let’s understand the MSP issue.


The British rule in India ruined Indian agriculture and impoverished the farmers. At Independence, farmers were too many earning too little. Crop failure and famine were a constant fear. Farmers rejoiced every good produce if and when happened as it gave them enough money to sustain a few months. Their lot was generally poor.

The first attempt to address the farm earning issue came into focus when the Jawaharlal Nehru government set up the Food-Grain Enquiry Committee in 1957. But it proved to be inconsequential. Then came the base push for an MSP — minimum support price — regime in 1964 when Lal Bahadur Shastri, who coined the Jai Jawan-Jai Kisan slogan, constituted the Food Grain Price Committee under his influential secretary LK Jha.

The committee submitted its report to the Ministry of Food and Agriculture in December 1964. The food and agriculture were then dealt under the same ministry. Though the report was approved by the Shastri government immediately, the first MSP announcement was made by Jagjivan Ram, the agriculture minister in the Indira Gandhi government, in 1967 at Rs 65 per quintal for wheat.

File photo: PTI

Thus the MSP regime came into existence as policy decision to guarantee an assured income to farmers and it was to be applicable uniformly across India. The government set up the Agricultural Prices Commission for fixing MSP for crops. The commission was renamed as the Commission for Agricultural Costs and Prices (CACP) in 1985. Today, 24 crops are covered under the MSP regime.


The MSP is basically a guarantee to the farmers that if they don’t a better price in the markets for the covered crops, the government would buy their agricultural produce at a fixed rate — the MSP. This came to be perceived as protection against loss for the farmers.

From Rs 65 a quintal to Rs 1975 a quintal, the MSP for wheat has increased many folds in the past 53 years. Still, the MSP regime has not evolved as all-inclusive.

The government report — NSSO survey of July 2012-June 2013 — showed that less than six per cent of Indian farmers (over 9 crore agricultural households) have benefitted directly from selling their wheat or rice under the MSP regime. This means an overwhelming majority of farmers could never become part of the income guarantee scheme for the farmers in so many decades.

This also means that there is something inherently wrong with the MSP regime as well as the legal-administrative framework that governs agriculture in India. It was this assessment of the Modi government, which had set up the Shanta Kumar committee to study food procurement mechanism and suggest ways for reforms, that the government brought two new farms laws and amended one existing law recently.

The MSP has remained in focus for several decades. In 2014 Lok Sabha election, the BJP and its then prime ministerial candidate Narendra Modi too promised to double the farmers’ income in five years or so.

A report that is often referred to for a good price for the agricultural produce grown by the farmers is the one by the MS Swaminathan Commission. The last report of the commission was submitted in 2006. The Modi government implemented the recommendations but only in parts expressing inability of full implementation by any government under the given circumstances.

Even today, when the farmers are picketing at the entrance of the national capital, a guarantee of an assured income remains their best hope. However, it is uncertain how such a guarantee can solve the problems of the farmers, particularly the small and marginal ones, if the same framework has failed to deliver in over 50 years despite the proverbial green revolution in India.

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