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MSP hike on wheat could not relieve farmer’s distress

On October 3, the government increased the MSP of wheat by Rs 105 per quintal, 6 percent more than last year, to improve the income of farmers. Despite this increase, the current MSP is just 46 percent above the cost of production (COP) when the center had promised to ensure that MSP would be 50 percent more than the cost of cultivation. 

The recent hike in MSP of wheat from 1,735 per quintal to 1,840 per quintal will still not meet the promise made by the Centre to fulfill MSP 50  percent higher than the cost of production. 

In 2015 the Modi-led government filed an affidavit in the Supreme Court saying it was impossible to provide MSP 50 percent higher than the cost of production due to market distortion. Later in 2016, the Union Agriculture Minister, Radha Mohan Singh, assured of his government’s commitment to fulfill the electoral promise. 

Now in 2018-19, the new formula for the increase in MSP was led down by M.S. Swaminathan report which was based on A2+FL+C2. So based on the formula if MSP is increased by 50 percent, then also farmers will not earn the profit as A2 stands for the cost of production including seeds, fertilizers and hired labors. A2 + FL stand for family workers in addition to A2 whereas C2 includes the cost of land rentals or interest on invested capital apart from A2+FL.  It is clear from above that C2 gives better profit to farmers than A2. As the promise C2+50 percent need to be given to the farmers instead they are getting A2+50 percent which is not the 50 percent hike in MSP which needs to be worked out. According to National Sample survey office report, only 6-8 percent farmers get MSP price of wheat and paddy  



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