Stop the flawed MSP myths, first ensure a taxable income for farmers

Policy makers, economists and the media seem happy with the seeds of confusion that have been sown. Whether it is the imaginative food inflation figures or the expected financial burden on the national exchequer, all kinds of questionable data is doing the rounds

Several decades ago, the distinguished civil servant-scientist-administrator Dr. M. S. Randhawa, had in an article talked about the popular perception about farmers and farming. A farmer is hardworking-come winter, summer or rain; you can always see him toiling hard in his fields. There is no denying that putting in their sweat and labour, farmers have single-handedly pulled the country from the abyss of a hunger trap.

But what disturbed Dr. Randhawa was the accepted image of a farmer that prevailed in the society at that time. In popular imagination, a farmer wears a simple dress, often a dirty kurta and dhoti and walks around wearing a soiled jutti with stitched holes. He is expected at best to use a bicycle for commuting and whenever you see him driving a two-wheeler, it often raises eyebrows.

Times may have changed but the perception about farmers and farming remains unchanged. It is almost a stereo-type presumption. The bicycle may have been replaced by a two-wheeler, which may be now replaced by swanky cars for the farmers in the upper bracket, but the popular imagination about farming as a profession hasn’t changed much. A reflection of the rural-urban divide is that farming continues to be at the urban fringe. For instance, a farmer is still frowned upon if he tries to enter the urban space, and apes even the food habits, like eating pizza for instance. Further, at a time when it is not unusual to see a household helper driving a scooty to her place of work, a farmer using an expensive music system on tractors is disapproved of.

Farming has in fact become a dirty word. There is so much of visceral apathy towards farmers that the dominant narrative questioning the protesting farmers demand for a legal guarantee for Minimum Support Price (MSP) is met with scorn and contempt. The derogatory terms that continue to be thrown at protesting farmers and the disparaging remarks in the mainline as well as the social media, is a reflection of the hatred and disgust that prevails against the farming community. It is generally believed that farmers are a pampered lot, receive huge subsidies, get free electricity and do not pay income tax. Any increase in farmer’s income will hit consumer prices as a result of which food inflation will increase therefore the focus has remained on denying farmers the right to enhanced income.

There is so much of misinformation and flawed economic arguments being tossed around that it isn’t easy to decipher the realty from the myth. In any case, policy makers, economists and the media seem happy with the seeds of confusion that have been sown. Whether it is the imaginative food inflation figures or the expected financial burden on the national exchequer, all kinds of questionable data is doing the rounds. The basic premise being that any rise in farmer’s income will distort markets and thereby reduce trade and industry profits.

In reality, what has become more than obvious is that the nation appears content at keeping the farmers perpetually in poverty.

If farmers were a pampered lot, I see no reason why the average farm income should continue to be at the lowest ebb. At the risk of reiterating what has been said earlier, the latest report of the Situational Assessment Survey for Agricultural Households 2021 computes the average monthly farm household income at Rs. 10,218. It also showed that the income from farming was less than the monthly wages of MNREGA workers. Worse still, as an Indian Express explainer on the situation of farmers (February 23) shows the average farm incomes in States like West Bengal and Odisha is still lower and in the range of Rs, 5,000 to Rs, 6,000 per household per month. Even in Andhra Pradesh and Telangana where more than 90 per cent farm households are indebted, the incomes are very low. In a study it has been found out that in several drought-hit districts of Andhra Pradesh nearly 14 per cent of household incomes come from government schemes that includes direct income support by the Union and State governments.

Moreover, as the 2022-23 Household Expenditure Survey presented a few days back shows how precarious farming has become as a professional enterprise with farm households consumption falling below rural households. Consumption is low because the income is low. Therefore to say farmers don’t pay income tax is not fair. As a nation isn’t it is our duty to first give farmers a taxable income?

In any case, it is the consumer-centric approach that actually denies farmers’ the right price. Barring a couple of years, terms of trade have remained negative. Several studies have shown that rural wages are stagnant or are declining for over a decade. The decline in farm household consumption levels corroborates that. And still, the moment a relatively higher MSP is announced, newspaper editorials invariably link it to an anticipated rise in food inflation.

What is little known is that the Commission for Agricultural Costs and Prices (CACP) which calculates MSP for 23 crops for which prices are announced does look into input-output price parity and trends in market prices before recommending the prices. There is no reason to complain if only the media had conveyed that MSP always factors in the effect it will have on consumer prices. Further, by keeping food inflation within the permissible range as prescribed by the Reserve Bank of India, what people don’t often realise is that farmers end up actually subsidising the consumers and thereby the nation’s economy.

Take the latest study by the Organisation for Economic Cooperation and Development (OECD). which makes it explicitly clear that Indian farmers have been cultivating losses since 2000, the year when it began assessing producer-subsidy support. The economic loss farmers have suffered is after what price markets give to farmers, and adding the subsidy support (including free electricity in some States) that farmers receive.

The OECD data makes it abundantly clear that to keep markets intact, we have deliberately kept farming pauperised.

As long as we continue to keep farmers deprived of the basic needs, the image that Dr. Randhawa drew for a farmer will linger on and it is not going to change.

A guaranteed MSP will be the first step to pull farmers out of the crisis but a lot more needs to be done to cover up the losses that he continues to suffer over the decades. Unless the effort shifts to ensuring income parity between farmers and other sections of the society, each and every farmer will remain a prisoner of his image.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)