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Punjab and Madhya Pradesh Farmers Unlikely to Reap Rewards of New MSP Calculation Formula, What it Means

Insights on Punjab and Madhya Pradesh Farmers Prospects under Revised MSP Calculation

In a move aimed at recalibrating Minimum Support Prices (MSP) for agricultural produce, the government’s decision to implement the C2+50% formula is anticipated to have minimal impact on farmers in Punjab and Madhya Pradesh. Despite the new formula, farmers in these states are expected to receive similar returns as under the existing scheme in the upcoming marketing season.

Challenges in Implementation

One of the major hurdles in implementing the C2+50% formula lies in the complex task of determining prices based on land rentals across different states. This poses a significant challenge for policymakers, as land rentals vary drastically from region to region. For instance, while land rentals around urban hubs like Mumbai or Delhi soar, they remain considerably lower in rural areas like Odisha or Manipur.

Official’s Perspective

An official emphasized the impracticality of applying a weighted average of land costs/rents nationwide while considering MSP. The example cited highlighted the substantial disparity in land rents between areas like Delhi’s Najafgarh and rural villages in Bihar or Chhattisgarh.

Current Scenario

Analysis from the Commission for Agricultural Costs & Prices (CACP) reveals that farmers in Punjab and Madhya Pradesh already receive MSP rates that exceed 50% of the comprehensive cost (C2). For instance, the current MSP for wheat in Punjab stands at Rs 2,275 per quintal, significantly higher than the C2+50% calculation of Rs 1,503 per quintal.

Regional Disparities

In contrast, farmers in states like Bihar or West Bengal receive MSP rates below 50% over the comprehensive costs. The comprehensive cost for wheat cultivation in Bihar and West Bengal amounts to Rs 1,745 and Rs 2,003 per quintal, respectively, indicating a shortfall compared to the proposed C2+50% formula.

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