Home > economy > MINIMUM SUPPORT PRICES AND FOOD INFLATION

MINIMUM SUPPORT PRICES AND FOOD INFLATION


  • Relatively of 6 years of UPA and BJP each over the last 12 years time frame, BJP has increased MSP of only 2 crops i.e, Gram, Rapeseed considerably over what UPA has done in its 6 years since 2004.
  • If increases in MSP over 6 years of each coalitions are compared, it is quite clear that magnitude of increase in UPA is far larger than NDA years.
  • From above observations it can be understood that , not only UPA has given farmers incentives to good income via, loan wavers and easy credit but also higher incomes
  • The menace of Food inflation that people( consumers) complain about is partly due to higher MSP given by UPA, but it is ironic that nations middle class  wants to  enjoy higher incomes every 5 years by protests , demanding better pay scales, from 5th pay scale to 6th , and average 8-10% increase in incomes in private sector yet they are not willing to pay a little more for food crops, so that farmers too enjoy better incomes.
  • Only healthy and profitable conditions of farming  can encourage farmers to increase area and yield of production , and UPA has  tried to do that via better incomes supports for farmers.

  • We as a nation’s big consuming class , owe responsibilty to farmers to make them inclusive to benefits of growth , and development india is witnessing over last 6 years,  and we can do that if we contribute part of our increased incomes,  to farmers , rather than complain about higher food prices.
  • Food inflation occurs either because of supply scarcity or higher food prices as is the case of recent food inflation. Also Now with increased MSP of food items over last 6 years, the government had to provide huge subsidies to meet the set MSP, currently subsidy bill in fiscal 2009-10 was 72000 crores,  and from budgetary point of view subsidies are just give aways , that add to deficits, which is surely not good thing to have.Subsidy arises in case market price of these commodities is lower than MSP, the government is then forced to buy all the produce at MSP and then sell in market at lower price. In the process it bears loss as it has to buy at higher prices from farmers and sell at lower prices in market.
  • To ensure farmers get better incomes, the subsidy bill of government will continue to grow, if the sale prices in market are not increased .Hence comes the food inflation, which we consumers and BJP protests, saying it is anti farmer.The reality is that last 6 years have been one of the best years for farmers of india, baring drought period of last year.
  • So food prices have to be hiked in order to reduce the subsidy bill , and i support paying a little more for food in short term, because after 5-6 years, it will lead to increased productivity of farmers, better crop yields and higher production, to bring down the prices and reduce the impact of droughts and floods on food prices.
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Categories: economy
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