Unmasking The Budget

The last full budget presented by Arun Jaitley was overwhelmingly focused on pro-people initiatives and the finance minister spent the initial 20 minutes of his speech on agriculture. The second most important part of his speech was public health. Jaitley was also eager to underline the achievements of his government ahead of next year's general elections and highlighted programmes like Ujjwala Yojana, Saubhagya Yojana, implementation of GST and improved ranking in ease of doing business. However, the government neglected a number of issues like climate change and its flagship programme Swachh Bharat Mission.

- Jitendra & Kundan Pandey

THE HOLLOW PROMISE OF INCREASING MSP

ON FEBRUARY 1, when Finance Minister Arun Jaitley said in the budget announcement that farmers would get 50 per cent higher minimum support price (MSP) than the cost of production for all crops grown in the current rabi season (2017-18) and upcoming kharif season, it should have infused enthusiasm among the country’s small farmers. But it has failed to uplift the spirit of Ramlal Singh, a small farmer from Bihar’s Sitamarhi district. Singh is one among the country’s 94 per cent of farmers who fail to benefit from MSP, no matter how high it is, in the absence of assured procurement by the government. Last year, though the government had fixed MSP of paddy at ₹ 1,550 per quintal, Singh was forced to sell his produce in the open market for ₹1,200.

If you think Jaitley’s announcement will benefit those who manage to sell their produce at MSP, think again. The government has not defined the cost of production, which lies at the heart of calculating MSP. The Commission for Agricultural Costs and Prices (CACP), which formulates and recommends MSP, categorises three types of cost of production: A2, A2+FL and C2. A2 represents the actual cost of farming including seeds, fertilisers and hired labourers. A2+FL represents family labourers in addition to A2. And C2 represents the cost of land rentals or interest on invested capital in addition to A2+FL. As many as 16 agriculture universities and institutions based in 19 states collect data from 10 farms of different sizes every day to ascertain the data related to cost of production.