MSP hikes have been well thought-out

Thiruvanathapuram S Ramakrishnan | Updated on July 16, 2020 Published on July 16, 2020

Towards self-sufficiency Higher MSP will encourage cultivation of key crops that are currently largely imported   -  THE HINDU

The relative focus on oilseeds and pulses as opposed to cereals will at once reduce our import bill and curb water usage

Last month, the Union government announced a revised minimum support price (MSP) for kharif crops for FY 2020-21. The MSP for the basket of oilseeds, comprising groundnut, sesamum, sunflower, soybean and niger, got an average boost of 8.98 per cent, followed by millets like jowar, bajra, ragi and maize getting an average boost of 4.36 per cent compared to their respective MSP in FY 2019-20. Pulses such as tur, moong and urad got an average boost of 3.48 per cent and paddy got the boost of 3.02 per cent; MSP of wheat remained the same.

To understand these substantial variations in MSP across crops, it is imperative to look at how India has achieved self-sufficiency, or hasn’t, across agricultural produce in the past.

Reduced imports

First, why did the government raise the MSP for oilseeds much more than other agricultural produce? Although India is by and large self-sufficient in agriculture produce, oilseeds are a clear exception. India’s annual requirement of oilseeds is 23 million tonnes, out of which Indian farmers produce only eight million tonnes, with the remaining being imported. The highest increase of MSP for oilseeds, therefore, was to encourage farmers to cultivate oilseeds more in the current fiscal and thereafter.

India has been importing palm oil from Malaysia and Nepal. When Jammu and Kashmir was bifurcated into two Union Territories, Malaysia made sharp remarks against that decision, despite it being an internal matter of India. Although India has been helping Nepal since its independence in all possible ways, Nepal has not been equally reciprocating. Given this, the Government of India decided to stop importing palm oil from these two countries. The firm message was that if countries question or act against the sovereignty of India, trade relations cannot continue to be “business as usual” with those countries. This also necessitates India to produce more oilseeds internally.

Millets saw the next maximum boost in the MSP. It is well known that millets are multi-nutrient grains and contain enormous fibre, and hence have a lower glycaemic index than staple foodgrains like rice and wheat. Barring Covid-19, India’s health paradigm has shifted to lifestyle diseases from infectious diseases in the last four decades. With people’s awareness increasing and grains with more fibre and nutrients being consumed to overcome lifestyle diseases, it is also important for the government to encourage farmers to cultivate millets more.

Changing landscape

The MSP for pulses also increased. With the increase in personal disposable incomes since 2000, the consumption of pulses has also increased significantly. During Modi 1.0, since 2014, India managed to produce only 17 million tonnes against the requirement of 21 million tonnes, thereby importing the rest.

The National Food Security Mission was established even before the Modi 1.0 dispensation to augment pulses production. However, the two successive drought years in 2014-15 and 2015-16, which pushed the prices of pulses to about ₹200 a kg, made the government to aggressively push the National Food Security Mission to bring more land under pulses. Therefore, the shortfall was overcome and prices dropped to less than ₹100 a kg in the next three years. India produced 23 million tonnes of pulses in FY 2019-20 and achieved self-reliance.

Despite being self-sufficient in pulses, India signed agreements with Canada, Myanmar, Mozambique, Russia, and Tanzania to import pulses for five years during the scarcity period, and hence will continue to buy these till the contract period. But, by being self-sufficient in pulses and oilseeds, India would save about ₹1-lakh crore in foreign exchange.

Consumption trend

The moot question is why did paddy get the lowest MSP increase of 3.02 per cent, and wheat nothing at all. Up till the Green Revolution in the late 1960s and early the 1970s, India had to import wheat from the US despite being a predominantly agricultural country in terms of GDP at that point of time. Although India achieved self-sufficiency in grains in the 1970s itself, the lingering legacy of shortfall in grains haunted the minds of policy-makers for decades, and rice and wheat cultivation have been promoted incessantly without a thought about the changing food consumption pattern of people. As a result, the stock of grains with the FCI has been about thrice the mandatory quantity needed for any contingency.

However, the per capita consumption of grains has been decreasing over the years and will drop in future also for various reasons. With the decline in physical activity, the per capita monthly consumption of all grains put together decreased from 11.7 kg in 2004-05 to 10.84 kg in 2011-12 in rural areas and from 9.43 kg in 2004-05 to 8.72 kg in 2011-12 in urban areas, whereas India produced 291.95 million tonnes of grains in 2019-20, which is equivalent to per capita production of 18 kg per month. With increase in disposable income, the food consumption has been moving towards oilseeds, pulses, vegetables, and fruits.

Benefits galore

One can hope that the bonanza in terms of increased MSP for oilseeds, millets, and pulses vis-a-vis rice and wheat would offset the lopsided cultivation of the cereals to some extent. It is also evident that diversification and rotation of crops rejuvenate nutrients in the soil and thereby increase the yield and benefit the farmer.

India spends about 78 per cent of its surface and underground water resources for agriculture alone, and mostly for water-guzzling crops such as paddy and sugarcane. To produce 1 kg of rice, 3,000- 5,000 litres of water are used and to produce 1 kg of sugar from sugarcane requires 1,500-3,000 litres of water. But oilseeds, millets and pulses require much less water. Ideally, India should have been cultivating water-guzzling crops in areas where surface water irrigation is available and other crops in areas that are dependent only on rain and groundwater.

Unfortunately, State governments, in a populist move, have been giving electricity either free or at heavy subsidy, and farmers are taking advantage of this to cultivate water-guzzling crops — the result is falling groundwater levels. The move to raise the MSP of non water-guzzling crops would at least push some sections of farmers to such crops, and thereby reduce the burden on the State electricity boards besides stopping any further deterioration of groundwater tables.

In a nutshell, there are at least five-fold benefits of the revision of the MSP for 2020 kharif crops announced by the Modi government — self-sufficiency across agriculture produce; crop diversification and rotation which would increase yield; stopping further deterioration of groundwater tables; pushing people to a well-balanced diet in changing times of reduced physical exertion; and savings in foreign exchange

All these will serve well both the farmers’ and the nation’s interests.

The writer is a public policy analyst

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Published on July 16, 2020
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