Modi govt has given 43% higher MSP than production cost, says Amit Shah

He adds, no govt can meet the Swaminathan formula for calculating the cost of production

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The Narendra Modi-led NDA government within first three years of coming to power has all but fulfilled its poll promise of giving farmers a support price that is 50 per cent more than cost of production of a crop, Bharatiya Janata Party (BJP) President Amit Shah has said.

The minimum support price (MSP) paid to farmers for their crops is now 43 per cent more than the cost of production if the cost of land is excluded from price calculation, he told PTI in an interview in New Delhi.

No government, he said, can meet the Swaminathan formula for calculating the cost of production as it includes cost of land, which is mostly inherited by farmers and whose value has gone up many folds over the years.

The BJP had swept the 2014 Lok Sabha election on the promise to fix agri MSP at 50 per cent more than the cost of production, among others.

This price recommendation was first made in 2006 by the National Commission on Farmers (NCF) headed by the eminent agricultural scientist M S Swaminathan.

"There is a dispute on one issue. Swaminathan calculated the formula (on MSP) by including the land price, which can never be possible to implement," he said.

He argued that land price cannot be computed in the total cost of production of agri-produce as farmers in most cases have inherited farm fields from their forefathers and the cost of that land is now in crores.

"That price cannot be taken into account and no government can give. Keeping aside this component, we have reached up to 43 per cent," Shah said.

Land cost, farm experts said, comprises roughly about 25- 30 per cent in the total cost of production of agri-crops. If land cost is excluded, MSP of most crops is more than 50 per cent of the cost of production at present. They are of the view that the Swaminathan recommendation is not based on economic logic.

The government fixes MSP of 25 crops. It is the price at which it procures rice and wheat from farmers for its buffer stock. It is also the price at which it buys commodities when mandi rates crash so as to protect farmers' interest.

Shah emphasised that the government has given "big hike" in the MSP of agri-crops, especially pulses, that helped the country achieve a record output to 22.14 million tonnes in 2016-17 crop year (July-June), reduced dependence on imports and contained price rise.

Total foodgrain production too reached an all-time high of 273.38 mt in 2016-17, pushing farm growth to 4.1 per cent and injecting fresh blood into the country's economy, he added.