Opinion Express View on India’s MSP policy: The right support

Oilseeds and pulses farmers today suffer policy discrimination on two counts. The first is from their minimum support prices (MSP) being largely on paper — unlike with rice, wheat and sugarcane, where the government assures MSP either through large-scale direct procurement, or by forcing mills to pay. Mustard is currently selling at Rs 5,000-5,100 per quintal in Rajasthan and chana (chickpea) at Rs 4,700-4,800 in Maharashtra, as against their respective MSPs of Rs 5,650 and Rs 5,440. And this is even before the crops now in the field are to be marketed in about two months’ time. The second bias has to do with imports. Wheat attracts 40 per cent import duty, with these at 70 per cent for milled rice and 100 per cent for sugar. As against this, crude palm, soyabean and sunflower oil are importable at zero duty. So are most pulses, barring chana and moong (green gram).

It is not for nothing that India’s edible oil imports have risen from 11.6 million to 16.5 million tonnes (mt) between 2013-14 and 2022-23, with the latter valued at $16.7 billion and meeting almost two-thirds of the domestic consumption requirement. That’s not a record the Narendra Modi government would be terribly pleased about. Things have been better in pulses, where imports have fallen from a peak of 6.6 mt in 2016-17 to 2.5 mt in 2022-23, translating into a 90 per cent-plus self-sufficiency ratio. But the current year has seen a resurgence of imports, with the Modi government swinging from a pro-producer to pro-consumer stance ahead of national elections. Price and tariff support apart, oilseeds and pulses have not received research and development attention anywhere near that for wheat, rice or sugarcane. Denial of approval for genetically-modified hybrid mustard and herbicide-resistant soyabean technologies is a manifestation of this official indifference. Even in pulses, the breakthroughs have been largely limited to breeding of short-duration and photo-thermo insensitive varieties in chana and moong.

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It’s not surprising then — and welcome, in fact — that various departments within the government are flagging concerns over the extant MSP and procurement policy favouring only a few crops, as a report in this newspaper has revealed. Farmers, like all rational economic actors, respond to price signals and incentives. MSPs should supplement, not supplant markets. The two sub-sectors of Indian agriculture that have registered the highest growth over the last two decades — livestock and horticulture — are the ones that are the most market-led. The crops sub-sector, on the other hand, has exhibited less dynamism, in which MSP-based market distortions have certainly played a role. That needs correction. The best way to do it is by replacing all price-based supports, whether MSP or input subsidies, with per-acre income transfers.