While throwing light upon various competing factors at play, critically examine the dichotomy between a legally guaranteed MSP with fiscal constraints and WTO regulations. Provide some recommendations on how the government can find a middle path forward.
The government faces three key constraints in meeting the farmers’ demands –
- Unfulfilled political promise of doubling farmer incomes by 2022, which becomes difficult without enhancing MSP or providing legal backing. Going back on these risks losing political support.
- Persistent demands from farmers organizations who have demonstrated ability to protest and extract concessions. Ignoring them risks provoking further unrest.
- Pressure from WTO and fiscal prudence arguments to reduce farm subsidies and MSP expenditure. This limits government’s ability to expand MSP coverage and amounts.
To find a middle path, the government could focus on long-term solutions instead of temporary price supports. For example:
- Draft a comprehensive agricultural policy and reform plan in consultation with states and farmers groups. This can address systemic issues on yields, irrigation, technology etc rather than just prices.
- Increase public investment in agriculture infrastructure, R&D, water efficiency etc. This can sustainably enhance productivity and farmer incomes instead of subsidies.
- Create more effective social safety nets and income support schemes for small and marginal farmers without distorting prices or violating WTO rules.
- Diversify risk management tools like crop insurance schemes, futures trading platforms etc to make farmer incomes less dependent solely on MSPs.
- Proactively communicate decisions and negotiate temporary concessions until long-term measures yield results. Build consensus and public support.
Undertaking these difficult reforms requires political will and skillful negotiations but can put Indian agriculture on a more sustainable path with shared growth for all stakeholders.
Topics: GS-III: Issues Related to Direct and Indirect Farm Subsidies and Minimum Support Prices