Farmer losses Rs.36,000 due to prices falling below MSP

• This year farm produce procurement prices have gone below the government-set minimum support price (MSP) for major kharif crops.
• Just by not getting the support price, total loss incurred by farmers is estimated to be Rs 36,000 crore in seven kharif crops -- paddy, maize, bajra, soyabean, groundnut, urad and cotton due to lack of government action.
• In reality, the announced MSPs are highly inadequate.
• It could be as much as Rs 200,000 crore if the loss is calculated from the actual cost of production plus 50% profit as assured by BJP in its election manifesto of 2014.
• The losses would be much more if other crops and perishable items such as potatoes and onions, are also considered.
• Six states have announced farm loan waivers following the Prime Minister’s announcement of a loan waiver amounting to Rs 36,000 crore during his UP election campaign. These waivers account for Rs 1.5 lakh crore or 23% of institutional lending.  
• The reasons that led to high indebtedness do not change. The banker will be double-cautious to give a fresh loan to this ‘defaulted’ farmer’ next time. The credit culture goes for a toss. 
• RBI and NABARD have termed farm loan waivers temporary and inadequate measures, which will provide short-term gain for long-term pain. 
• Loan waivers are not a permanent solution and the government cannot runaway from the fact that only remunerative prices for their crops will enable farmers to survive without loan waivers.
• American farm subsidies are egregiously expensive, harvesting $20 billion a year. Most of the money goes to big, rich farmers producing staple commodities such as corn and soyabeans.
• The country has failed to manage surplus, often forcing farmers to dump tomato/ potato crops onto the streets, and it is here that infrastructure development is desperately required. This has to be followed up by various initiatives to provide cheaper credit and other measures to prop up agriculture.
• Unless farmer emerges debt free, there is no way farming can be turned into a profitable venture. It is estimated that Rs 12.50 lakh crore is the level of farm indebtedness that prevails.
• At present, only six percent farmers get the benefit of MSP. Ninety four percent of farmers are dependent on the markets. If these markets were efficient, there is no reason why farming should have been in a terrible crisis.
• Modi must understand that being on a perpetual promissory mode is fraught with dangers. So far, Modi remained in perpetual dream-merchant mode, promising endless undertakings. Inability to deliver such pledges is now beginning to catch up.

On March 2, 2015, Narendra Modi became the first serving Prime Minister to visit Parliament canteen as a customer and have lunch. After paying Rs 29 for his lunch, PM Modi wrote in the visitors' diary: Annadata Sukhi Bhavah (May provider of food prosper). Two years later, the same provider of food is angry, hitting the streets and massive agitations were witnessed in Maharashtra and Madhya Pradesh. The Modi government overlooked the fact that farming in India works beyond the limits of loans. Modi government's flagship schemes have not made any difference to lives of farmers. In Feb 2015, Modi government submitted an affidavit in the Supreme Court saying, 'Although we have promised in our manifesto that we will give remunerative prices to farmers as per the recommendations of the Swaminathan Commission, we are unable to do that because we find it impractical to do so. Therefore, we cannot do it.' In fact latest MSP's doesn't even cover the cost of production.