Agriculture Minister Radha Mohan Singh on Tuesday told the Lok Sabha that the Centre, along with the state government will soon finalise a new mechanism to fix the minimum support price for farm produce at 1.5 times the cost of cultivation.
Singh's assurance came in response to queries from members as to what would constitute the cultivation cost that would form the basis for fixing the support price.
Members wanted to know whether the production cost would constitute actual paid up cost plus the imputed value of family labour or the comprehensive cost that also includes rent and interest on owned land.
Agriculture activists have been demanding that the government consider comprehensive cost (C2) as the basis for fixing the MSP instead of the actual paid up cost plus family labour (A2+FL)
"Niti Ayog, the Central government and the state governments will together finalise the new mechanism to ensure that farmers receive MSP for their crop," Singh said.
While presenting the Union Budget last week, Finance Minister Arun Jaitley had declared that the government would ensure that farmers get 1.5 times the cost of production as the minimum support price for their produce.
This was one of the key promises made by the BJP ahead of the Lok Sabha elections in 2014.
As per the current mechanism, the government announces MSP for 23 item every crop season, but the system has worked only in states that have a robust procurement infrastructure.
Farmers in states such as Punjab and Haryana reap benefits of the MSP system but elsewhere farmers are forced to sell their produce at lower rates.
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