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Subject: Agriculture

  • 10 New Agricultural Commodities added to the E-NAM platform

    Why in the News?

    The Agriculture Ministry has allowed trading of 10 additional commodities on the electronic-National Agriculture Market (E-NAM), taking the total number of tradable items on the platform to 231.

    About the 10 new commodities:

    The newly added commodities include dried Tulsi leaves, Besant (Chickpea flour), wheat flour, chana sattu (Roasted Chickpea Flour), water Chestnut flour, asafoetida, dried fenugreek leaves, baby corn, dragon fruit and water Chestnut, the ministry said in a statement.

    Current Status of E-NAM (As of December 2024):

    • 1,410 mandis connected across 22 states and Union Territories.
    • Inter-state trade worth ₹5,022 crore has been recorded.
    • ₹6,831 crore e-payments made across 948 mandis.
    • Trade in 1.44 lakh metric tonnes of grains and 3.4 crore units of perishable commodities such as bamboo, betel leaves, coconuts, and lemons.

    What is E-NAM?

    • E-NAM is a pan-India electronic trading platform launched by the Government of India on April 14, 2016.
    • It integrates existing Agriculture Produce Market Committees (APMCs) to create a unified national market for agricultural commodities.
    • The Small Farmers Agribusiness Consortium (SFAC), under the Ministry of Agriculture and Farmers’ Welfare, is the implementing agency for e-NAM.
    • The platform enables farmers, traders, and buyers to trade agricultural commodities online, across states, ensuring better price discovery and transparency.

    Objectives of e-NAM

    • Improve market efficiency by integrating APMC mandis into a unified online platform.
    • Enhance price discovery through a competitive bidding process, ensuring fair market prices for farmers.
    • Promote inter-state trade by removing barriers and unifying agricultural markets across India.
    • Reduce dependency on middlemen, ensuring direct benefits to farmers.
    • Facilitate e-payments to ensure quick and transparent financial transactions for farmers.

    What is E-NAM 2.0?

    • E-NAM 2.0 is an upgraded version of the Electronic National Agriculture Market (e-NAM), launched to improve inter-state agricultural trade, logistics, and digital accessibility for farmers.
    • It integrates logistics service providers, allowing farmers to sell produce directly from their farms using a farm-gate module.
    • Key features include real-time price discovery, Aadhaar-based e-KYC, warehouse-based trading, and direct online payments.
    • The platform enhances transparency, efficiency, and access to a nationwide market, reducing dependence on middlemen.
    • It aims to boost farmer incomes, minimize wastage, and create a unified digital agricultural ecosystem across India.

     

    PYQ:

    [2017] What is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme?

    1. It is a pan-India electronic trading portal for agricultural commodities.
    2. It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce.

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • New Makhana Board and Food Institute to be opened in Bihar

    Why in the News?

    The Union Budget 2025 has announced the establishment of a Makhana Board in Bihar to improve production, processing, value addition, and marketing of makhana (fox nut).

    What is Makhana? 

    makhana

    • Makhana, also known as fox nut, is the edible seed of the prickly water lily (Euryale ferox), grown in freshwater ponds across India and South Asia.
    • Bihar produces 90% of India’s makhana, with major hubs in Darbhanga, Madhubani, Purnea, and Katihar.
    • It is nutrient-rich, low-fat, and considered a superfood, gaining popularity in domestic and international markets.
    • Traditionally used in religious rituals, makhana is now promoted for its health benefits and commercial potential.

    About the Makhana Board 

    • The Makhana Board will train farmers, ensure market access, regulate pricing, and promote exports.
    • The Food Processing Institute will focus on value addition, quality control, research, and global trade facilitation.
    • Aims & Objectives:
      • Increase production by promoting high-yield varieties like Swarna Vaidehi and Sabour Makhana-1.
      • Improve processing infrastructure to reduce wastage and enhance product quality.
      • Support exports through cargo infrastructure, trade partnerships, and branding initiatives.
    • Structural Mandate:
      • Governing body led by government officials, farmer representatives, and industry experts.
      • Regional centers in key makhana-producing districts to assist farmers.
      • Partnerships with ICAR, NABARD, and agricultural universities for research and financial support.
      • ₹100 crore initial funding for infrastructure, training, and market expansion.
    • Powers & Functions: Regulate production, enforce quality standards, provide subsidies, promote research, develop export infrastructure, and launch branding campaigns.

  • Agriculture is fiscally neglected in the Budget

    Why in the News?

    A budget reflects how a government addresses the challenges in the economy. The Economic Survey 2024-25 tried to present a positive view of Indian agriculture’s situation.

    What are the specific budget allocations for agriculture?

    • Total Allocation: The Union Budget for 2025-26 has allocated ₹1.71 lakh crore for agriculture and allied activities, an increase from ₹1.51 lakh crore in the previous fiscal year.
    • Prime Minister Dhan-Dhaanya Krishi Yojana: This new initiative aims to enhance agricultural productivity in 100 districts with low productivity, targeting 1.7 crore farmers through sustainable practices and improved irrigation facilities.
    • Kisan Credit Card (KCC) Expansion: The loan limit under the Modified Interest Subvention Scheme for KCCs will be raised from ₹3 lakh to ₹5 lakh, facilitating better access to credit for farmers.
    • PM-Kisan Scheme: The allocation for the PM-Kisan scheme remains at ₹63,500 crore, consistent with the revised estimates from the previous year, aimed at providing direct income support to farmers.
      • The PM-Kisan scheme provides annual income support of ₹6,000 to eligible farmers, distributed in three instalments, which is crucial for enhancing their financial stability.
    • Pradhan Mantri Fasal Bima Yojana: This crop insurance scheme has seen a significant reduction in funding, with allocations decreasing from ₹14,600 crore in previous estimates to ₹12,242.27 crore for 2025-26.
    • Makhana Board: A new Makhana Board in Bihar has been allocated ₹100 crore, while other missions include ₹100 crore for hybrid seeds and ₹500 crore for cotton technology.
    • National Mission on Natural Farming: The mission received a significant allocation of ₹516 crore, emphasizing sustainable agricultural practices and increasing the adoption of natural farming methods.
    • Support for Pulses and Oilseeds: The government is launching a six-year mission focused on self-sufficiency in pulses and edible oils, with procurement support from agencies like NAFED and NCCF, aiming to enhance domestic production.

    What measures are being proposed to support farmers and enhance agricultural productivity?

    • Prime Minister Dhan-Dhaanya Krishi Yojana: This new scheme aims to target 100 districts with low productivity, focusing on improving crop intensity and credit parameters. However, concerns exist regarding its centralized governance approach.
    • Investment in Sustainable Practices: The government emphasizes sustainable agriculture practices through initiatives like the Pradhan Mantri Krishi Sinchayi Yojana (PMKSY) aimed at enhancing irrigation efficiency.
    • Post-Harvest Infrastructure Investment: The Agriculture Infrastructure Fund (AIF) is highlighted as a mechanism to improve post-harvest infrastructure, although specific allocations remain unclear.

    Does the budget reflect the broader economic context and challenges?

    • Addressing Farmer Distress: The budget reflects the urgent need to address farmer distress by extending support measures such as lower loan interest rates and increased PM-KISAN assistance.
    • Investment in Sustainable Practices: The budget emphasizes the importance of sustainable agriculture, with recommendations for increased investment in climate-resilient seeds and agricultural research.
    • Post-Harvest Management Improvements: Recognizing significant post-harvest losses, the budget allocates funds to improve cold storage and processing facilities. This investment is crucial for reducing waste and enhancing the value chain, which is vital for improving farmers’ profitability and food security.
    • Focus on Technological Adoption: There is a push for greater adoption of agri-tech solutions to tackle issues like low mechanization and inadequate access to quality seeds. This reflects an understanding that modernizing agriculture is essential for boosting productivity and competitiveness in a challenging economic environment.
    • Long-Term Structural Reforms: The budget indicates a need for transformational changes rather than incremental adjustments, advocating for a shift from subsidy-heavy approaches to investment-driven growth.
      • This strategic direction aims to make Indian agriculture more resilient and globally competitive by 2047.

    Way forward: 

    • Increased Investment in Agricultural R&D and Infrastructure – The government should prioritize higher allocations for agricultural research, modern irrigation techniques, and post-harvest infrastructure to enhance productivity and climate resilience.
    • Targeted Financial Support and Market Reforms – Strengthening direct income support, improving crop insurance schemes, and ensuring better price realization through MSP reforms and enhanced market linkages will help stabilize farmers’ incomes and boost rural demand.

    Mains PYQ:

    Q Explain various types of revolutions, took place in Agriculture after Independence in India. How these revolutions have helped in poverty alleviation and food security in India? (UPSC IAS/2017)

  • A pragmatic picture: Economic Survey

    Why in the News?

    The Budget session of Parliament has started at a time when India’s economic situation is shifting. After four years of strong growth following the pandemic, the economy is slowing down.

    What are the key projections for India’s economic growth in FY 2024-25?

    • Projected GDP Growth: The National Statistical Office (NSO) has estimated that India’s GDP will grow by 6.4% in FY 2024-25. This figure marks a decline from the 8.2% growth recorded in FY 2023-24 and is lower than earlier forecasts which ranged from 6.5% to 7%.
    • Sectoral Performance: The slowdown is attributed to weaker performance in sectors such as manufacturing and services. The first half of FY 2024-25 is expected to see a growth rate of around 6%, necessitating a stronger performance of 6.8% in the second half to meet the annual target.
    • Comparative Estimates: While the NSO’s estimate stands at 6.4%, other organizations like the International Monetary Fund (IMF) have projected a slightly higher growth rate of 7%, reflecting differing outlooks on economic recovery and consumer demand.

    How does the Economic Survey address challenges such as inflation and global uncertainties?

    • Food Inflation Concerns: Despite the overall decline in inflation, food inflation remains a challenge, rising from 7.5% in FY24 to 8.4% in the same period due to supply chain disruptions and adverse weather conditions. 
      • The survey emphasizes the need for improved agricultural practices and climate-resilient crops to manage these risks effectively.
    • Inflation Trends: The survey reports a reduction in retail inflation from 5.4% in FY24 to 4.9% during April-December 2024, indicating a positive trend towards achieving the RBI’s target of around 4% by FY26, contingent on stable global commodity prices and favorable domestic agricultural output.
    • Global Economic Uncertainties: The survey highlights that ongoing geopolitical tensions and global trade risks pose significant challenges to inflation management, necessitating careful policy interventions to mitigate potential impacts on the domestic economy.
    • Policy Recommendations: To address these challenges, the Economic Survey advocates for strategic policy measures, including enhancing supply chain resilience, improving data collection for better price monitoring, and fostering an environment conducive to investment and growth.

    What structural reforms are recommended to enhance long-term economic stability?

    • Deregulation and Ease of Doing Business: The Economic Survey advocates for significant deregulation to foster a more conducive business environment. It stresses that the government should “get out of the way” of businesses by minimizing micro-management and enhancing accountability among regulators.
    • Empowering Small Firms: Recommendations include empowering small enterprises, enhancing economic freedom, and ensuring a level playing field across sectors to stimulate growth and investment.
    • Focus on Domestic Demand: The budget is expected to prioritize boosting domestic demand through increased government spending, particularly in infrastructure and capital projects, as a countermeasure against global uncertainties and inflationary pressures.

    Way forward: 

    • Strengthen Domestic Resilience – Focus on boosting domestic consumption and investment through targeted fiscal measures, infrastructure expansion, and support for MSMEs to counter global uncertainties.
    • Enhance Inflation Management – Implement climate-resilient agricultural policies, improve supply chain efficiency, and strengthen monetary-fiscal coordination to maintain stable inflation and ensure sustainable growth.

    Mains PYQ:

    Q Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India.(UPSC IAS/2022)

  • Cannabis Cultivation in India

    Why in the News?

    The Himachal Pradesh Cabinet has approved a pilot study for the controlled cultivation of cannabis for medicinal and industrial purposes.

    Legal Status of Cannabis Cultivation in India:

    • Prohibited for recreational use under the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985.
    • Section 2 of the NDPS Act bans the cultivation, production, and sale of cannabis resin and flowers.
    • Section 10 allows state governments to regulate cannabis cultivation for medicinal and scientific purposes.
    • Section 14 grants the Central Government authority to permit cultivation for industrial uses (fiber and seed extraction).

    Why Himachal Pradesh Could Soon Allow Controlled Cannabis Cultivation?

    • The Himalayan region’s soil and climate are ideal for cultivating low-THC hemp varieties, making Himachal Pradesh a prime location for controlled cannabis farming.
    • The government sees controlled cultivation as a way to generate revenue, create employment opportunities, and support local farmers, particularly in Kullu, Chamba, Mandi, Solan, Kangra, and Sirmaur.
    • Cannabis cultivation will be restricted to industrial and pharmaceutical uses, such as:
      • Pain relief medications
      • Textile and paper production
      • Biofuel and cosmetics
      • Hemp-based food products
    • The Kullu and Malana regions are known for illegal narcotic cannabis cultivation. Regulating the sector could reduce illegal activities and ensure legal trade.
    • The Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985 allows state governments to permit and regulate cannabis cultivation for scientific, medicinal, and industrial purposes under strict conditions.

    Which are the other States to allow Controlled Cannabis Cultivation in India?

    • Uttarakhand (2018):
      • First state to legalize industrial hemp cultivation.
      • Managed by the Centre for Aromatic Plants (CAP), Selaqui.
      • Challenges include maintaining THC levels below 0.3% and seed availability.
    • Madhya Pradesh (2023):
      • Approved medicinal cannabis research but commercial cultivation is yet to start.
      • Sai Phytoceuticals (Pvt. Ltd.) received the first license for cannabis-based medicine production.
    • Jammu & Kashmir (2021):
      • India’s first medicinal cannabis pilot project launched by CSIR-Indian Institute of Integrative Medicine (IIIM), Jammu.
      • Conducted in Public-Private Partnership (PPP) mode with a Canadian firm.
      • Research focuses on cannabis-based cancer and epilepsy treatments.

    PYQ:

    [2018] India’s proximity to the two of the world’s biggest illicit opium-growing states has enhanced her internal security concerns. Explain the linkages between drug trafficking and other illicit activities such as gunrunning, money laundering and human trafficking. What counter-measures should be taken to prevent the same?

  • Only a radical policy shift can lift farmers from widespread distress

    Why in the News?

    Agriculture has been given little attention, even though the National Crime Records Bureau (NCRB) data shows that 1,00,474 farmers and agricultural workers took their own lives between 2015 and 2022.

    What are the root causes of the current agrarian distress faced by farmers in India?

    • Unmet Minimum Support Price (MSP) Promise: Despite repeated promises, the government has failed to implement the MSP at the rate of C2+50% (one-and-a-half times the comprehensive cost of production) as recommended by the M.S. Swaminathan Commission.
    • Rising Input Costs and Economic Burden: The cost of agricultural inputs such as fertilizers, seeds, insecticides, diesel, water, and electricity has been steadily rising.
    • Inadequate Government Support and Infrastructure: Government allocations to agriculture and allied sectors have been declining, from 5.44% of the total budget in 2019 to just 3.15% in 2024.
      • At the same time, public investment in irrigation and power infrastructure has decreased, leading to water scarcity and unreliable electricity supply.

    How can policy reforms effectively address the challenges faced by farmers?

    • Implementation of MSP: Establishing a statutory MSP at C2+50% is essential to ensure that farmers receive fair compensation for their produce. This reform would help alleviate financial distress and reduce the incidence of farm suicides.
    • Subsidy Increases and Cost Controls: The government should raise subsidies for agricultural inputs and impose strict controls on prices charged by private corporations for fertilizers and seeds. Supporting public sector production can help stabilize prices and ensure availability.
    • Comprehensive Loan Waiver: A one-time loan waiver for farmers can provide immediate relief from debt burdens. This measure should be coupled with long-term strategies to prevent future indebtedness through better financial management and support systems.

    What role do government support and institutional frameworks play in alleviating farmer distress?

    • Financial Assistance and Subsidies: Government support through subsidies for fertilizers, seeds, and irrigation systems helps reduce the financial burden on farmers. For example, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) provides direct income support to farmers, aiding those facing economic hardship.
    • Crop Insurance and Risk Mitigation: Institutional frameworks such as the Pradhan Mantri Fasal Bima Yojana (PMFBY) offer insurance schemes to protect farmers against crop losses due to natural disasters, thereby reducing the risk of distress when unforeseen events occur.
    • Market Access and Price Support: The government ensures fair prices and stable markets through Minimum Support Price (MSP) and procurement schemes. The Food Corporation of India (FCI) buys surplus crops like wheat and rice from farmers at MSP, offering a safety net during market fluctuations.
    • Agricultural Credit and Loans: Institutional frameworks like the NABARD (National Bank for Agriculture and Rural Development) and other banks offer affordable loans to farmers, allowing them to invest in better farming techniques or recover from losses, thus mitigating financial stress.
      • For example, Kisan Credit Cards (KCC) provide short-term credit to meet the farmers’ needs for inputs and daily expenses.

    Way forward: 

    • Strengthen Infrastructure and Support Systems: Invest in reliable irrigation, power supply, and crop insurance schemes, ensuring farmers have access to resources that help them cope with climate-related challenges and reduce dependency on private traders.
    • Enhance Financial Accessibility and Risk Management: Expand access to affordable credit, implement statutory MSP at C2+50%, and provide better financial literacy programs to help farmers manage debts and reduce vulnerability to market fluctuations.

    Mains PYQ:

    Q Explain various types of revolutions, took place in Agriculture after Independence in India. How these revolutions have helped in poverty alleviation and food security in India? (UPSC IAS/2017) 

  • Rythu Bharosa Scheme

    Why in the News?

    The Telangana government has started distributing funds under the Rythu Bharosa Scheme, also known as the Farmer’s Investment Support Scheme (FISS).

    About the Rythu Bharosa Scheme:

    • The Rythu Bharosa Scheme, also known as the Farmer’s Investment Support Scheme (FISS), was launched by the Telangana government in 2018 to provide direct financial assistance to farmers.
    • It is the first direct investment support scheme in India, where cash is transferred directly to farmers before each crop season to help them with agricultural expenses.
    • Objective: To reduce financial burden, improve agricultural productivity, and prevent farmers from falling into debt traps due to high input costs.
    • Provisions:
      • Under the scheme, every farmer receives ₹5,000 per acre per crop season, ensuring ₹10,000 per acre annually for two crop seasons.
      • The financial assistance is provided before the sowing season, allowing farmers to plan their investments efficiently.
      • There is no limit on the size of landholdings, meaning both small and large farmers can benefit.
    • Criteria:
      • The scheme is available only to resident farmers of Telangana who own agricultural land in the state.
      • Scheduled Tribe (ST) farmers cultivating land with Record of Forest Rights (ROFR) documents are eligible for assistance.
      • Tenant farmers, commercial farmers, and those farming under contractual agreements are not eligible to receive benefits under this scheme.
      • The funds are disbursed through bank bearer cheques under the supervision of Agriculture Extension Officers to ensure transparent distribution.

    PYQ:

    [2020] Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

    1. Working capital for maintenance of farm assets
    2. Purchase of combine harvesters, tractors and mini trucks
    3. Consumption requirements of farm households
    4. Post-harvest expenses
    5. Construction of family house and setting up of village cold storage facility

    Select the correct answer using the code given below:

    (a) 1, 2 and 5 only
    (b) 1, 3 and 4 only
    (c) 2, 3, 4 and 5 only
    (d) 1, 2, 3, 4 and 5

  • India becomes largest importer of Tea from Kenya

    Why in the News?

    India, the world’s second-largest tea producer after China, has become the largest importer of tea from Kenya, signaling a shift in global tea trade dynamics.

    Key Highlights of Tea Trade

    • Imports surged from 3.53 million kg in 2023 to 13.71 million kg in 2024, reflecting a significant 288% increase.
    • The average price of Kenyan tea imported to India was ₹156.73 per kg, significantly lower than ₹252.83 per kg fetched by Assam tea at auctions up to October 2024.
    • India’s tea exports increased by 13%, rising from 184.46 million kg in 2023 to 209.14 million kg in 2024.
    • Assam and West Bengal were major contributors to exports, accounting for the bulk of the tea exported.

    About Tea Board of India

    • The Tea Board of India was established in 1954 under the Tea Act, 1953, succeeding the Central Tea Board and Indian Tea Licensing Committee.
    • It was originally formed under the Indian Tea Cess Bill (1903) to promote Indian tea domestically and internationally.
    • It is headquartered in Kolkata, with 23 offices across India, including zonal, regional, and sub-regional offices.
    • It functions as a statutory body under the Ministry of Commerce and Industry, with 31 members, including representatives from Parliament, tea producers, traders, and trade unions.
    • Provides financial and technical assistance for tea cultivation, manufacturing, and marketing, supports R&D to improve tea quality, and monitors pesticide residue compliance.

    Tea Crop in India

    • Under the Treaty of Yandabo (1826), the East India Company gained control of Assam, laying the foundation for India’s commercial tea industry.
    • The British finally introduced tea to India in the 19th century to compete with China’s monopoly, establishing the first commercial tea garden in Chabua, Assam, in 1837.
    • Tea requires 20°C–30°C temperatures and 150–300 cm annual rainfall with slightly acidic, well-drained soil for optimal growth.
    • India is the second-largest tea producer globally and the largest consumer, accounting for 30% of global tea consumption, with major production in Assam, West Bengal, Tamil Nadu, and Kerala.

     

    PYQ:

    [2022] With reference to the “Tea Board” in India, consider the following statements:

    1. The Tea Board is a statutory body.
    2. It is a regulatory body attached to the Ministry of Agriculture and Farmers Welfare.
    3. The Tea Board’s Head Office is situated in Bengaluru.
    4. The Board has overseas offices at Dubai and Moscow.

    Which of the statements given above are correct?

    (a) 1 and 3

    (b) 2 and 4

    (c) 3 and 4

    (d) 1 and 4

  • National Turmeric Board

    Why in the News?

    The Union Minister of Commerce & Industry inaugurated the National Turmeric Board in New Delhi, with Palle Ganga Reddy appointed as its first Chairperson.

    About the National Turmeric Board  

    Details
    • Operates under the Ministry of Commerce & Industry.
    • Headquarters: Nizamabad, Telangana.
    • Aim: To enhance turmeric production, support farmers, and boost global exports.
    Structural Mandate
    • Chaired by a Central Government appointee.
    • Includes representatives from the Ministry of AYUSH, Department of Pharmaceuticals, Department of Agriculture & Farmers Welfare, and Department of Commerce.
    • Rotating senior representatives from three states are also part of the Board.
    Powers and Functions
    • Promotes awareness of turmeric’s medicinal and essential properties.
    • Supports farmers across 20 states, including Maharashtra and Tamil Nadu.
    • Facilitates research, value addition, and development of new products for domestic and global markets.
    • Enhances logistics, supply chains, and trade opportunities.
    Turmeric (Curcuma longa) Production in India
    • Turmeric is also known as ‘Golden Spice’.
      • It thrives in temperatures ranging between 20°C and 30°C with high annual rainfall.
    • India is the largest producer, consumer, and exporter of turmeric globally.
    • Cultivates 30+ varieties over 3.05 lakh hectares, producing 10.74 lakh tonnes (2023-24).
    • Accounts for over 70% of global turmeric production and 62% of world exports.
    • Key exporting markets: Bangladesh, UAE, the US, and Malaysia.
    • GI-tagged turmeric includes Lakadong (Meghalaya), Kandhamal (Odisha), and Erode (Tamil Nadu).
    • Note: The Centre does NOT declare MSP for Turmeric.

     

    PYQ:

    [2018] Consider the following:

    1. Areca nut
    2. Barley
    3. Coffee
    4. Finger millet
    5. Groundnut
    6. Sesamum
    7. Turmeric

    The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above?

    (a) 1, 2, 3 and 7 only

    (b) 2, 4, 5 and 6 only

    (c) 1, 3, 4, 5 and 6 only

    (d) 1, 2, 3, 4, 5, 6 and 7

  • No, legal guarantee for MSP is not a “folly”

    Why in the News?

    There is an ongoing heated discussion about whether farmers should be given a legal guarantee for Minimum Support Price (MSP).

    Is a legal guarantee for MSP feasible within India’s economic framework?The arguments in favour of the legalisation of MSP: 

    • Protects Farmers from Market Fluctuations: Farmers often face volatile market prices due to surplus production, inadequate infrastructure, or global competition. A legal guarantee for MSP ensures a minimum income and shields them from sudden price crashes.
    • Example: Crops like onions and tomatoes frequently see price collapses that leave farmers unable to cover costs.
    • Addresses Rural Distress and Ensures Livelihood Security: A guaranteed MSP provides a reliable source of income, reducing poverty and addressing the rural distress that drives issues like farmer suicides.
    • Example: In drought-prone regions, assured MSP acts as a safety net against the dual impacts of climate change and market failures.
    • Supports National Food Security: Incentivizing farmers through a guaranteed MSP ensures the continued production of essential crops, securing food for the nation and stabilizing food prices for consumers.
    • Example: Government procurement of rice and wheat at MSP forms the backbone of the Public Distribution System (PDS), ensuring affordable food for millions.

    The arguments against the legalisation of MSP: 

    • Risk of Market Distortions: A legally enforced MSP could disrupt natural price discovery, discouraging private investment in agriculture and creating inefficiencies in the market. Example: Guaranteed MSP could encourage overproduction of certain crops, leading to supply gluts and environmental degradation.
    • Unsustainable Fiscal Burden: Implementing MSP for a wide range of crops would require massive public expenditure, diverting resources from other developmental priorities like healthcare and education. 

     

    What mechanisms can ensure farmers receive the MSP without direct government purchases?

    • Widening Food Basket: Expanding the food basket in the Public Distribution System (PDS) and increasing procurement levels at MSP can help ensure farmers receive fair prices without direct purchases.
    • Market Intervention Schemes: Establishing targeted market intervention schemes can prevent prices from falling below the MSP, thus providing farmers with necessary price support.
    • Price Deficit Payment (PDP): A legally mandated compensation mechanism for farmers when market prices fall below the MSP could be implemented. This would not require direct procurement but would ensure farmers are compensated based on official data regarding area sown and average productivity.

    What are the broader implications of a legal MSP guarantee on agricultural policy and farmer welfare?

    • Social Contract: The demand for a legally guaranteed MSP reflects an unwritten social contract between the Indian state and farmers. Breaching this contract could lead to further disenfranchisement of farmers facing challenges like climate change and global competition.
    • Market Dynamics: A legal guarantee could alter market dynamics by ensuring that farmers are not solely dependent on volatile market conditions. This might encourage more stable agricultural production and investment in rural areas.
    • Political Considerations: Given the electoral implications of food prices in a democracy, a legally guaranteed MSP could compel governments to prioritise farmer welfare over consumer price suppression, potentially leading to more balanced agricultural policies.

    Way forward: 

    • Strengthen Decentralized Procurement and PDP Mechanisms: Expand the food basket under PDS and introduce Price Deficit Payment (PDP) schemes to ensure farmers receive MSP without burdening government finances through direct procurement. This would also reduce inefficiencies in distribution.
    • Promote Diversification and Agri-Infrastructure: Encourage crop diversification by linking MSP with environmentally sustainable and high-value crops, supported by improved storage, transportation, and market access to minimize post-harvest losses and enhance farmer incomes sustainably.

    Mains PYQ:

    Q What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap? (UPSC IAS/2018)