SBI Report Suggests New Ways to Help Farmers Instead of Legal MSP Guarantee
A recent report by the State Bank of India recommends alternative methods to support farmers instead of a legal guarantee for minimum support price (MSP). The report suggests developing more agricultural markets and village haats to help farmers sell directly to consumers. It also highlights the challenges of the current MSP system and proposes solutions like crop diversification and a price deficiency payment system. The report warns that a legal MSP guarantee could be financially burdensome and neglect non-MSP crops.
Key Recommendations
- Develop more agricultural markets (mandis) and village haats.
- Encourage crop diversification and promote high-value, climate-resilient crops.
- Implement a price deficiency payment system to support farmers.
Challenges of Current MSP System
The report notes that the current MSP system faces issues like political interference, disincentivizing private investment, and neglect of non-MSP crops. It also mentions the potential fiscal burden of a legal MSP guarantee, which could cost around Rs 13.5 lakh crore in FY24.
Data on Government Procurement
The report provides data on government procurement, showing that while MSP for 22 crops has increased by over 100%, the government mainly procures wheat and paddy. For example, 92.8% of paddy in Punjab and 73.6% in Haryana are procured by the government.
Farm Loan Waivers
The report also addresses the issue of farm loan waivers, stating that they distort the agricultural credit culture and undermine long-term sustainability.
