Farmers protest 2.0: How tenable is the MSP demand? Breaking down the numbers

NEW DELHI: Almost two years after laying siege to the national capital, by farmers from Punjab, Haryana and Western Uttar Pradesh, Delhi borders turned into a fresh ‘battlezone’ on Tuesday with Farmers protest 2.0 ‘choking’ the city. Farmers, pertaining to the same region, 'launched ‘Chalo Delhi’ march, though with truncated strength and demands, starkly different from 2020-21 protests.

The main demand of protesting farmers, this time, is a legal guarantee of Minimum Support Price (MSP) for all the Kharif and Rabi crops, besides seeking Rs 10,000 pension for farmers above 60 years and more.

A MSP for Kharif and Rabi crops would mean that government lays down a fixed price, so that farmers get a ‘fixed’ income irrespective of the amount and quality of their crop produce.

Farmers have every right to seek ‘government shield’ but MSP for every crop is not feasible, tenable and justified, not just politically but also economically.

First talking about economic fallout, there exist a big gap between farmers demand and government’s MSP allocation, for years.

In the fiscal year 2020, the market value of agricultural produce stood at Rs 10 lakh crore and this included all 24 crops under MSP purview. However, the total MSP procurement in that year stood at Rs 2.5 lakh crore, which is just 25 per cent of the produce under MSP.

If the government cedes to farmers demand for legislation, thereby according it a guarantee, the exchequer would stand to bleed with additional expenditure of at least Rs 10 lakh crore annually.

Notably, this amount is almost equal to the Central government’s allocation of Rs 11.11 lakh crore, in the interim budget this year, for infrastructure development.

Moreover, this amount is more than the annual average expenditure on infrastructure in the last 7 fiscal years (2016-2023), which stands at Rs 67 lakh crore.

A careful assessment of the monetary figures makes for an easy judgement. The MSP guarantee law won’t be justified, reasonable and also economically tenable.

Politically, even if government bows down to farmers protest and agrees for MSP guarantee for all crops, it would need to earmark Rs 10 lakh crore every year. For raising such surplus money, government would have to either curtail expenditure on defence purchases and infrastructure development or burden the taxpayers with more levies and surcharges.

Experts believe that taking out Rs 10 lakh crore out of Rs 45 lakh crore Budget expenditure (for fiscal year 2025) for crops guarantee every year, makes for a poor and ill-devised judgement. It will not just burden the economy but also stifle government’s hands in taking farmer-friendly measures.

The farmers protest this time comes just months ahead of Parliamentary elections 2024. The 17th Lok Sabha has adjourned sine die and is in no way ‘empowered’ to frame a law/regulation on MSP for farm produce.

The ‘Delhi Chalo’ march in 2024 has the support of less than half of the 40 farmer organisations, that besieged the capital in 2020-2021. Many top leaders and faces of previous farm protests are ‘missing’ this time. Last time, the farm laws became the rallying point but this time, MSP for crops is the main agenda.

Even if government gives in to farmers demand as it did two years ago, a full Parliament session will be required to frame the MSP law.

At the outset, Farmers protest 2.0 looks more of a motivated, political demonstration and sponsored protest, allegedly with support of rival factions, rather than real fight for farmers’ rights and justice.