1. MSP - the Factoids (Unreliable Information that Becomes a Fact With Excessive Usage) Versus the Facts
GS 3- Minimum Support Price
What is MSP?
- The debate on agricultural issues must take into account the changed geography of procurement and the seller’s profile
- According to popular beliefs, few (6%) farmers benefit, only large farmers benefit, and only farmers of Punjab and Haryana (to some extent, western Uttar Pradesh) benefit.
- According to one definition, a factoid is “an item of unreliable information that is reported and repeated so often that it becomes accepted as fact”.
- After the passage of the three controversial farm laws, the Minimum Support Price (MSP) — not mentioned in the laws — has gained a lot of attention.
More States Under MSP
- Minimum Support Price or MSP is the price at which the government ‘promises’ to buy from farmers if market prices fall below it.
- The MSP is meant to set a floor below which prices do not fall, and is announced by the government for 23 commodities.
- In fact, however, government procurement is heavily concentrated on wheat and rice, with other crops barely being procured.
A/C to data on State-wise procurement from the Food Corporation of India (FCI) and agricultural household data for 2012-13 from the National Sample Survey (NSS), below are the following arguments:
Which Farmers Benefit?
- One, the 6% figure from the NSS data 2012-13 relates to paddy and wheat alone. Even here, however, among those who sold any paddy/wheat, the numbers are higher — 14% and 16%.
- Two, the Government of India has made a systematic effort to expand the reach of MSP to more States, via the Decentralized Procurement (DCP) Scheme - introduced in 1997-98, it was not very popular in the initial years and began to be adopted by States in earnest only around 2005.
- Under the DCP scheme, the responsibility of procurement devolved to the State governments which were reimbursed pre-approved costs.
- FCI data suggest that by July 2015, as many as 15 States had taken up this programme, though not all were implementing it with equal enthusiasm.
- Largely on account of it, procurement began moving out of ‘traditional’ States (such as Punjab, Haryana, western Uttar Pradesh).
- Until 2000, barely 10% of wheat and rice was procured outside the traditional States. By 2012-13, the share of the DCP States rose to 25-35%.
- In the case of paddy, Chhattisgarh and Odisha have been the star performers.
- These States today contribute about 10% each to the total paddy procurement in the country. For wheat, decentralised procurement has taken off in Madhya Pradesh in a big way, accounting for approximately 20% of wheat procurement.
- In 2020-21, wheat procurement from Madhya Pradesh surpassed that from even Punjab. Among agricultural households which sell paddy under the procurement system, while 9% and 7% come from Punjab and Haryana, 11% are in Odisha and 33% are in Chhattisgarh.
- An overwhelming majority of agricultural households selling wheat to the procurement agencies come from Madhya Pradesh (33%) compared to 22% from Punjab and 18% from Haryana.
- That only Punjab and Haryana farmers have benefited from the MSP is now truly a thing of the past.
What is the True Picture?
- As per the factoid, only large farmers have benefited.
- In fact, procurement has benefited the small and marginal farmers in much bigger numbers than medium and large farmers.
- At the all-India level, among those who sold paddy to the government, 1% were large farmers, owning over 10 hectares of land.
- Small and marginal farmers, with less than 2 hectares accounted for 70%. The rest (29%) were medium farmers (2-10 hectares).
- In the case of wheat, 3% of all wheat-selling farmers were large farmers. More than half (56%) were small and marginal farmers.
- In Punjab and Haryana, the share of small and marginal farmers is not insignificant (38% and 58%, respectively, among paddy sellers).
- In the non-traditional States that adopted the DCP scheme, the overwhelming majority of farmers who sell to State procurement agencies are small and marginal.
- In Chhattisgarh and Odisha, for example, small and marginal farmers comprise 70-80% of all sellers to government agencies.
- Similarly, in Madhya Pradesh, nearly half (45%) of those who sell wheat to government agencies are small or marginal farmers.
In a Nutshel
- Among Punjabis who cultivated any crop, 21-37% did not grow paddy and wheat.
- Among all agricultural households including those which did not cultivate a crop (indicating more diversified sources of agricultural income), a larger proportion (58 and 48%, respectively) stayed away from paddy and wheat, suggesting that procurement in Punjab may not have prevented diversification to the extent we imagine.
- Similarly, confusion reigns about other areas of interest from the point of view of the new farm laws.
- It is widely believed that for the first time, the new laws allow farmers to sell outside the Agricultural Produce Market Committee (APMC).
- Even for commodities for which MSP is announced, the proportion of sales via the mandi range is only between 10-64%; the demand for the MSP originates because the prices paid outside the mandi tend to be much lower.
- Countrywide, sales to mandi or government procurement agencies fetched on average 13.3% higher prices for paddy and 5.8% for wheat.
- One, the proportion of farmers who benefit from (even flawed) government procurement policies is not insignificant.
- Two, the geography of procurement has changed in the past 15 years - It is less concentrated in traditional states such as Punjab, Haryana and western Uttar Pradesh, as DCP States such as Chhattisgarh, Madhya Pradesh and Odisha have started participating more vigorously.
- Three, perhaps most importantly — it is predominantly the small and marginal farmers who have benefited from the MSP and procurement, even if the size of the benefits may be larger for larger farmers.
- This is true not just in the DCP States, but also in the traditional States.
- The first step in resolving the issues facing the agricultural sector and farmers’ issues is consolidating the right facts.
- The range of claims made regarding, for example, the consequences of the MSP on diversification need to be examined as well.
2. Friend and Neighbour: India, Bangladesh Virtual Summit
GS 2- India and its neighbourhood relations
Recently India and Bangladesh summit was held virtually. In this summit, many agreements were held between the two counties.Bilateral Documents Between India And Bangladesh
On this occasion, the following bilateral documents were signed and exchanged by the officials of the Governments of India and Bangladesh:
- The framework of Understanding (FOU) on Cooperation in the Hydrocarbon Sector,
- Protocol on Trans-boundary Elephant Conservation,
- MOU regarding Indian Grant Assistance for Implementation of High Impact Community Development Projects (HICDPs) through Local Bodies and other Public Sector Institutions;
- MOU on Supply of Equipment and Improvement of Garbage / Solid Waste Disposal Ground at Lamchori Area for Barishal City Corporation;
- Terms of Reference of India-Bangladesh CEOs Forum;
- MoU between Father of the Nation Bangabandhu Sheikh Mujibur Rahman Memorial Museum, Dhaka, Bangladesh and the National Museum, New Delhi, India,
- MoU on Cooperation in the field of Agriculture.
How Bangladesh GOT Independence
- Beautification and city development project in Rajshahi City,
- Construction of Khalishpur Collegiate Girl’s School in Khulna.
Issues Which Were Discussed During Summit
- Modern Bangladesh was established with the separation of Bengal and India in August 1947.
- At that time the region became East Pakistan as a part of the newly formed State of Pakistan.
- Proclamation of Bangladeshi Independence in March 1971 led to the nine-month-long Bangladesh Liberation War, that build up East Pakistan emerging as the People's Republic of Bangladesh.
Major Problems Between Two Countries
- Violent border incidents to the COVID-19 fight.
- Desire to restart India-Bangladesh ties that have faced challenges in recent months.
- Indian prime minister called Bangladesh a “major pillar” in India’s neighbourhood first policy.
- Prime Minister Sheikh Hasina thanked Prime Minister of India for accepting her invitation to visit Bangladesh in March 2021.
- This invitation is to join the celebrations on the occasion of 50th anniversary of Bangladesh’s Independence and 50 years of Bangladesh-India diplomatic relations.
Situation in Bangladesh
- The Teesta water dispute remains unresolved between the countries.
- The Citizenship (Amendment) Act also disturbed relations with India.
- Proposed National Register of Citizens, called unnecessary by Bangladesh prime minister.
- With many friendship agreements, the border has been sensitive.
- According to rights watchdog, 25 Bangladeshis were killed in the first six months of this year by Indian forces in the border areas.
- China is making deep inroads into Bangladesh by ramping up infrastructure investments and expanding economic cooperation.
- Prime minister of Bangladesh has done relatively well in steering Bangladesh through crises.
- Bangladesh's current ruling party is Awami League.
- Under this government, Bangladesh has expanded its economy and improved social welfare.
- The country is continued to face challenges from Islamist factions. War crimes and corruption trials have weakened the traditional opposition.
- An Islamist group, Hifazat-e-Islam, also organised mass protests against French President Emmanuel Macron.
- As well as this group opposed the government’s plan to build a statue of the country’s founding father, Bangabandhu Mujibur Rahman, in Dhaka.
- According to this group installing statues is prohibited in Islam and that they would be pulled down.
- But Prime Minister of Bangladesh does not want to allow the country to be divided into religious lines.
- India should support the Bangladesh government's fight against the radical elements.
- India should also not allow the ideological inclinations of the ruling party to spoil the historic relationship between the two countries.
- It should take a broader view of the changing scenario and growing competition in South Asia.
- India should reach out to Dhaka with an open mind.
Bangladesh is also India’s largest trading partner in South Asia. So, it is the need of the hour for India to bolster ties with this all-weather friend.