View: The clamour…and silence…over MSP in the farm bills (Economic Times)

Economic Times (India) published an op-ed by Senior Research Fellow Devesh Roy and J.V. Meenakshi on the MSP (Minimum Support Price) System, in place since the mid-1960s, was part of the country’s drive to reduce dependence on food imports. It was an integral part of a package that included subsidized inputs meant to incentivize farmers to adopt new technologies and enhance farm productivity. The MSP was meant to protect farmers against price crashes that could (and do) occur with large harvests. Today, in many Indian states, MSPs have been met with protests. While other states have ignored the system. The MSP has played a role in mitigating downside risk for farmers however, its effectiveness depends on the interplay of the National Food Security Act, operations, crop choices, the degree of intermediation and competition (amongst buyers) in the market, and MSP implementation. More market-driven outcomes will require investments in infrastructure, so that farmers can expand their options to sell, and to operate in a level playing field. The MSP is not a substitute for technology-driven increases in farmer incomes.