The revision of Minimum Support Prices (MSPs) for Rabi crops, while touted as a step toward fair pricing for farmers, falls short of delivering real benefits in the current economic climate. The increases, ranging from 2.41 per cent to 7.03 per cent across various crops, may seem promising at first glance. However, when considered in the broader context of inflation, input costs, and the Swaminathan Committee’s recommendations, the revised MSPs do little more than cushion the inflationary blow rather than offering true financial relief to farmers. For instance, the MSP for wheat has been increased to Rs 2,425 per quintal from Rs. 2,275 last year ~ a rise of 6.59 per cent.
Barley saw the highest hike of 7.03 per cent, while the MSP for gram, lentil, mustard, and sunflower rose marginally. Yet, this increase pales in comparison to the sharp rise in inflation. In September 2024, India’s consumer price index inflation stood at 5.49 per cent, while food price inflation reached 9.24 per cent. This means that the increases in MSP are largely absorbed by inflation, leaving farmers with little to no additional purchasing power. Moreover, the Swaminathan Committee’s formula, which has long been advocated for ensuring farmers receive a fair price, further highlights the inadequacy of the revised MSPs. According to this formula, the MSP for wheat should be Rs 2,580 per quintal, for barley Rs 2,606.50, and for gram Rs 6,993.
The government’s current MSP rates fall well below these recommendations, meaning that farmers are being underpaid when compared to what they should be receiving under the committee’s framework. The gap between the actual MSPs and the Swaminathan formula is particularly concerning because it demonstrates that farmers are not receiving the compensation necessary to cover their production costs and make a reasonable profit. Beyond the issue of insufficient MSP increases, there is the larger problem of procurement. A significant number of farmers do not benefit from MSPs at all. For example, during the current Rabi season, only 2.2 million wheat farmers benefited from the government’s procurement system, a notable drop from previous years.
The procurement process itself is riddled with inefficiencies, corruption, and commissions that further reduce the actual amount farmers receive. In some states, allegations of scams in the procurement system have surfaced, where farmers must pay hefty commissions just to participate in the programme, leaving them with far less than the full MSP. To ensure that farmers receive fair prices, it is imperative that the government not only raises MSPs in line with inflation and input costs but also cleans up the procurement system. Expanding the scope of procurement to include more crops and enhancing transparency and accountability in the process could go a long way in ensuring that more farmers benefit. Until these systemic issues are addressed, the promise of “fair prices” will remain unfulfilled.