Will Use Formula That Farmers Want: Niti Aayog Boss On Budget Pledge

New Delhi:  One of the biggest announcements in this year's budget was the promise to fix minimum support prices, the price at which the government buys crops from farmers, at 50 per cent over their cost of production.

But the decision has become a bone of contention with farmers and agricultural experts worrying that the government may stick to its existing formula - known as "A2+FL" - to determine the cost of production. That, they say, only factors in paid-out expenses by the farmer and excludes the notional rent of farm land.

Farm groups want prices to be calculated using a more comprehensive formula, known as "C2", which includes the cost of land rentals and interest.
 Speaking exclusively to NDTV, the NITI Aayog's vice chairman Rajiv Kumar said that the government will use C2 for determining support prices.

"The Finance Minister has promised this in this budget. I am sure he will keep to that promise and we will use C2 while calculating cost-plus-50 per cent margin as we go forward. That is what the Finance Minister seemed to imply and I am sure that is what he meant," Mr Kumar said.
 In his speech, the Finance Minister hinted that the government will stick to the existing "A2+FL" formula.

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This, if implemented, will result in an increase of anywhere between 25-40 per cent of the support prices.

Yogendra Yadav, President of Swaraj Abhiyan, the farmers' movement, said that if the government is able to implement C2, "I will salute your government and congratulate them."