The political logic of the increases in the Minimum Support Price (MSP) for rabi crops, including wheat, announced by the Modi government this week, is clear. It is the need to please the farmers before the Assembly elections in five states and the Lok Sabha elections in 2024. The crops, apart from wheat, whose MSPs have been increased, are gram, barley, masur, mustard and safflower. The states where elections are being held next month are major producers of these crops. Madhya Pradesh is the top producer of masur, Rajasthan tops in production of barley and mustard, and Telangana is a major producer of safflower. MP and Rajasthan are also major wheat producers. Farmers’ distress is an important election issue in all states and so higher prices for crops are on the poll agenda of all parties. While the government has announced a support price of Rs 2,275 for wheat, the Congress has promised Rs 2,600 if it comes to power.
Wheat, the most important rabi crop, has got the highest price increase. While the wheat MSP has been hiked 7 per cent, the price increase for other crops ranges between 1.9 per cent and 3.6 per cent, except for barley which got a hike of 6.6 per cent. The average increase in wheat MSP has been Rs 40-110 for the past nine years, but this year the increase is Rs 150. The high MSP is also intended to ensure that there is adequate procurement and stocking of wheat in the warehouses. The current wheat holdings are just above the minimum. There are worries about the rabi crop because of the deficient monsoon and the likely impact of El Nino. Food inflation is already high. A poor harvest and low procurement will keep the price momentum up. Food inflation can spur general inflation also, and the government does not want to take chances with prices before the general election. By making a disproportionate increase in the price of wheat this year, the government has moved away from its idea of promoting crop diversification in favour of oil seeds and coarse grains, though in the past 10 years as a whole the prices of other crops have gained more than that of wheat.
Farmers are the largest voters’ bloc in the country, though all of them do not vote as farmers. The government has a special reason to please them after the farmers’ protests against the new farm laws of 2020. There is no doubt that farmers should be paid remunerative prices for their produce, but they should not be just election sops. It should be noted that the procurement system is not good in most states, and there is no legal guarantee for the MSP.