Jun 6, 2016

Going by the income parity norms, paddy MSP should be Rs 5,100 per quintal.


The Minimum Support Price (MSP) for paddy for the 2016-17 cropping season should have been Rs 5,100 per quintal (100kg). Now don’t get startled. This is what their legitimate due is. It is however a different matter that after all the hard work they put in, despite two years of back-to-back drought, all that farmers have been promised by way of paddy price is a paltry Rs 1,470 per quintal for the common grade paddy they cultivate.
Indian farmers have been short-changed all these years.
At Rs 1,470 per quintal, the increase in paddy price is merely Rs 60 over the previous year’s price. The nominal increase in paddy price, which equals to a raise of 4.25 per cent, is less than the rate of food inflation. This is certainly a gross discrimination. At a time when the government employees get a steady increase in DA allowances every 6 months, even when wholesale prices have remained stagnant, and on top of it the DA they get is merged with the basic salary, I don’t understand the economic rationale of keeping farmers deliberately impoverished.
Denial of a legitimate income to farmers is the single most important reason behind the terrible agrarian crisis that continues to prevail. While the farmers seek a higher price, the fact remains that successive governments have ensured that the farmers alone carry the economic burden of keeping food inflation low. Forget about profit, farmers are actually being penalized to grow food.
This is a classic example of how Peter is being robbed to pay Paul.
Let me explain. In 1970, the MSP for paddy was Rs 51 per quintal. Forty-six years later, in 2016, the MSP for paddy has been fixed at Rs 1,470 per quintal. This is an increase of 28.82 times or let us says 29 times in roundabout figures. In the same period, the monthly salary government employees has gone up by 120 to 150 times; that of college teachers/professors by 150 to 170 times; of school teachers by 280 to 320 times; and that of middle level corporate employees by 300 times. I am counting only the basic salary plus the DA that was prevalent in 1970 and have analysed the corresponding increase in the next 25 years.
Although the jump in monthly salary of various organized sections of the society ranges between 120 to 300 times in the 25 year period, for the sake of an easy assessment let us take 100 times increase in the basic salary structure to be the benchmark. If the income of a farmer had increased in the same proportion, and farmer’s income is measured through the MSP he receives, the paddy MSP should have been Rs 5,100 per quintal. Yes, you heard it right: Rs 5,100 per quintal. Farmers therefore are being short-changed to the tune of at least Rs 3,630 per quintal.
Denying income parity with other sections of the society is what has made farming a losing proposition. In the absence of a living income, farmers have been pushed into a mounting spiral of indebtedness. The serial death dance being witnessed for the past 20 years, taking a heavy toll of more than 3.2-lakh farmers, is a reflection of the economic hardship that farmers are being made to undergo for no fault of theirs.
In the 7th Pay Commission report, the basic salary of a chaprasi has been increased from Rs 7,000 to Rs 18,000 per month, an increase of roughly 260 per cent. In addition, the 7th Pay Commission has pruned the list of allowances that the employees get, from the existing 196 to 108. In other words, employees get 108 allowances, while I agree not all of them get all allowances. But the MSP for farmers does not include even a single allowance. This is where the farmers are overtly discriminated against. If the MSP calculations were to include just four allowances – housing, DA, health and education – the face of Indian agriculture would have changed for the better. Indian agriculture would have turned into a pivot of development, with farming turning predominantly prosperous.
But the moment you talk of a higher MSP, economists rise in chorus warning of a higher food inflation, which in turn feed into the consumer price index (CPI). Since the guaranteed rural wages are linked to CPI it will also trigger a wage-spiral. While this is true, the question that needs to be asked is why should farmers be penalized for keeping food inflation under control for people who in any case get DA allowance linked to inflation? Why can’t the average consumer also share the burden of keeping food prices low? What economists have failed to realize is that farmer is the only community in the country which is being deprived of its legitimate income.
Producing food has turned out to be a punishment.
A 0.5 per cent service tax in the name of kisan kalyan is not what farmers need. What they need is a higher MSP in resonance with other organized sections of the society. If not, then let the Finance Ministry reject the report of 7th Pay Commission. Instead have another 0.5 per cent cess for the welfare of government employees. And, why not? Let there be parity when it comes to income distribution. One small section cannot be pampered at the cost of another, a gigantic one. Having a cess for the sake of farmers and implement the 7th Pay Commission report for government employees smacks of disparity. It’s time also to set up a Farmers Income Commission.
So what’s the way out. Well, my suggestion is that the government should procure paddy at the MSP it has announced — Rs 1,470 per quintal. The remaining difference between the legitimate price that is due to a farmer and the MSP announced, which comes to Rs 3,630 per quintal, should be deposited directly in the bank accounts of paddy growers. Since every farmer has a bank account underJan Dhan Yoyna, it shouldn’t be difficult any more. Such an approach will keep food inflation under check and at the same time address the bigger issue of income insecurity for farmers.
I see no reason why it can’t be done. If the government is willing to incur an additional Rs 1.02-lakh crore every year for about 45 lakh central government employees and approximately 50 lakh pensioners by way of  implementation cost of 7th Pay Commission report, please tell me why a similar amount cannot be provided to millions of paddy growers to begin with. The more the money in the hands of farmers, the more will be the generation of demand. This is the pre-requisite for industrial and manufacturing growth, which is lagging behind now in the absence of adequate domestic demand. In my understanding such a policy imperative in true sense will deliver what Prime Minister Narendra Modi has envisioned: Sabka Saath Sabka Vikas.

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