It must not be viewed merely as a subsidy to farmers but also as a tool to aid in price management. A well-designed MSP system can provide income support to farmers and also serve as a complementary tool to control food inflation.
Recent interventions by the Indian government distort agricultural markets that are in need of a renewed push for reforms. It’s time to farmers and go for greater market orientation, not less.
Policy intervention in agriculture by way of MSPs and subsidies has incentivized inappropriate crops and its impact on air toxicity has grown harsh. We need structural reforms in the farm sector but this will take a formal mechanism for the Centre and states to work jointly.
The Narendra Modi government will require a rethink and a more collaborative approach, even as the burden shifts to state governments to pick up the baton of reform.