Vested interests, not MSP, fuelling stir, finds SBI study

CHANDIGARH: A research study conducted by the State Bank of India (SBI) research team has found that the ongoing farmers’ agitation is not due to the MSP but vested political interests, as some states are concerned about the loss of revenue from mandi taxes and fees. It currently ranges from 8.5% (6% mandi tax and 2.5% fee for handling central procurement) in Punjab to less than 1% in some other states.
The study, conducted by a team under SBI’s group chief economic adviser Soumya Kanti Ghosh, has also found that apart from Haryana, in no other state do farmers sell their crops in electronic national agriculture market (e-NAM) mandis. In the case of Punjab, where annual income of agricultural households is almost Rs 2.8 lakh, only 1% farmers are associated with e-NAM.
Only 19% households aware of MSP
As per the National Sample Survey’s 70th round survey on key indicators of situation of agricultural households in India, on an average only 19% of households are aware of MSP and 15% are aware of procurement agency. Only 7% households sell crops to procurement agency and only 10% of total crops are sold at MSP. This indicates that almost 93% of households sell goods in open market and face market imperfections, says the study.
Lopsided system of procurement
“India follows a legacy and lopsided system of procurement of primarily cereals that was implemented in the 1960s to benefit from the cereal granary states in north India, primarily Punjab and Haryana, and a large part of edifice of food grain procurement infrastructure is built around such states,” says the study. While UP and West Bengal are at first and second number in rice production, food grain procurement is only 18% by the Food Corporation of India (FCI) from such states, but in Punjab and Haryana (number 10) which are lower in rice production, the average procurement is still a staggering 90% by FCI.