India’s finance minister Arun Jaitley, in his price range speech on Feb. 01, promised to lift the minimal strengthen worth (MSP) for farmers on their produce, making sure no less than 50% benefit on funding.
However, this promise is also vague at superb and impossible at worst, contends Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices, which is mandated to suggest the MSP.
Edited excerpts from an interview with one in all India’s best-known agricultural economists:
Do you assume the price range’s farm thrust is vital or is it simply posturing?
The greatest announcement for the farm sector is that they've promised 50% upper MSP than value. They have no longer clarified which value they're speaking about. Is it the great value (together with hire and passion on owned land and capital), which is referred to as C2? Or is it A2, which is the paid out value? If it is A2, already MSPs are 50% upper than value. If it C2, then it is going to require a 50% hike in MSP, as an example, in paddy. That would reason massive distortion.
Is the meals subsidy allocation reflecting the opportunity of a pointy upward thrust in meals costs?
Food subsidy is Rs1.69 lakh crore, when put next to a revised estimate of Rs1.four lakh crore. Nearly Rs30,000 crore, that’s a vital upward thrust.
If they had been to certainly hike the MSP, how quickly will it replicate in meals inflation?
At provide, they've simply introduced a 50% build up over value. I doubt they may be able to do it. Inflation will cross up, cropping patterns gets distorted, diversification will opt for a six. It can't occur even subsequent 12 months. How are you able to build up MSP by way of 50% in a 12 months or two, while you haven’t executed that during 5 years?
What is your total verdict at the price range from the agriculture standpoint?
There are some things which are just right. One is the fishery and animal husbandry fund of Rs10,000 crore. Number two, agriculture advertising and infrastructure strengthen Rs2,000 crore—thumbs up! Initiating “Operation Green” for onion, tomatoes, and potatoes with a Rs500 crore outlay—thumbs up! On MSP, we want rationalization.