Manish Tewari | Miscalculated MSP and other unkept promises

The current agitation once again focuses attention on the larger structural issues bedeviling Indian agriculture.

The genesis of these structural fault lines ironically lie in the progressive and beneficial legislation enacted immediately after independence, namely the various land ceiling and Zamindari/Ryotwari/Mahalwari abolition laws that were correctly promulgated to give land to the tiller and end the pernicious exploitation of the peasantry by the rural feudal elite — the notorious and rapacious Zamindars that the British created to extract revenue from poor and impoverished farmers.

Those who may have watched the 1953 Bollywood film Do Bigha Zameen can perhaps relate to the atrocities perpetrated by the Zamindars on hapless small and marginal farmers during those times.

Obviously, therefore, there is no question that these progressive legislation that were inserted into the Ninth Schedule of the Constitution of India in 1951 vide the First Amendment can ever be rolled back. That is where the Minimum Support Price (MSP) becomes a germane issue.

The average size of a land holding in India is 1.08 hectares or 2.66 acres. Two-thirds of these land holdings are classified as marginal and have an average size of 0.39 hectares or 0.9 acres. This makes agriculture on a standalone basis an unviable economic activity, thereby putting a severe strain on livelihoods solely based upon agriculture.

According to a Press Information Bureau Press Release of November 2022, “Agriculture continues to be the prime pulse of the Indian economy and is at the core of the socioeconomic development of the country. It accounts for around 19 per cent of the GDP and about two-thirds of the population is dependent on the sector.” This means 93 crore or 930 million people.

In a good year a farmer of a self-owned three-acre plot is able to make about Rs 20,000 per month de-hors the labour cost of an entire family tilling their own land. If a person is a contract agriculturalist the same numbers come down to about Rs 9,500 a month. These calculations are near accurate approximations based upon the rice and wheat cycle prevalent in the breadbasket of India, i.e. Punjab and Haryana, at the Minimum Support Price (MSP). That is why a legal architecture around the MSP question is even more a critical issue for the farmers of Punjab.

Government statistics underscore a far grimmer reality. “As per the National Sample Survey, the estimated average monthly income per agricultural household increased from Rs 6,426 in 2012-13 to Rs 10,218 in 2018-19.” Presuming these numbers are correct because government data is suspect even then it is a mere pittance.

In 2004, the then UPA government established the National Commission of Farmers (NCF) under the leadership of M.S. Swaminathan. The NCF was created with the objective of determining the causes of farmer distress, the rise in farmer suicides, and how to address these issues.

One of the significant recommendations of the Swaminathan Committee was the method of calculating the Minimum Support Price which was to be set at 50 per cent more than the average cost of production of the crop. This was intended to ensure viable returns for the farmers. Accordingly, the formula determined by the Swaminathan Committee is expressed as “C2 + 50”. This formula includes the cost of production (C2), encompassing the total actual cost of producing the crops, imputed rent on the land owned by the farmer, and imputed interest on any fixed capital owned by the farmer.

In response to an unstarred question in the Rajya Sabha regarding the fixing of MSP (Starred Question No. 110), the NDA government stated that it will abide by the recommendations of the Swaminathan Committee and fix the MSP at one-and-a-half times the total cost of production. However, it relied upon a formula which was absolutely in dissonance with the Swaminathan Committee’s formula. The NDA/BJP government relied on “A2 + FL” to calculate MSP. Herein A2 was the average cost of production and FL was the imputed cost of family labour. This formula fails to take into consideration the value of owned rent or capital.

If the Swaminathan Committee’s report is implemented, it would significantly help in boosting the Minimum Support Prices (MSP) of crops and provide valuable assistance to farmers. According to Down To Earth, the MSP for Rabi crops for the marketing season 2024-2025 would be as follows: Wheat would be Rs 2,478 as against the current Rs 2,275; barley would be Rs 2,421 as against the current Rs 1,850; lentil would be Rs 7,335 as against the current Rs 6,425, and finally, gram would be Rs 6,820.50 as against the current Rs 5,440.

The anti-farmer policies of the current dispensation has increased income inequality among farmers. According to the Centre for Financial Accountability, New Delhi, an average of 30 farmers commit suicide per day during the NDA/BJP government’s tenure. Moreover, we also see that the absolute number of indebted farmers has increased from 902 lakhs to 930 lakhs in the same period. And the average amount of outstanding loans has surged about 1.6 times compared to 2013.

What is further distressing is the manner in which the government is dealing with the farmers’ protest. The government is using colonial-era laws, such as the Temporary Suspension of Telecom Services (Public Emergency or Public Safety) Rules, 2017, of the Indian Telegraph Act, 1885, to block Internet services and suppress the farmers’ legitimate right to articulate their anguish on grounds of “public emergency” and “public safety”. Moreover, drones are being employed to tear-gas and disperse crowds.

This stands in stark contrast to how authorities are handling farmer protests in France, Poland and other parts of the European Union, where the objective is not to squelch dissent but to try and resolve their problems.

Punjab is a border state that has contributed to the defence of the nation in a substantial manner. It makes 7.7 per cent of the Indian army despite having a 2.3 per cent share in the national population. An overwhelming majority of them are sons and daughters of the very farmers who are being brutalised on the borders of Punjab and Haryana and prevented by the “hukumrans” from coming to Delhi to even exercise their fundamental right of protest guaranteed under Article 19(1)(b ) of the Constitution of India.