Opinion | National Interest Demands NDA Holds The Line And Its Nerve in The Face of Ruinous Maximum Subsidy Politics (MSP)

They’re back menacing Delhi’s borders. And they’re better prepared. Armed with tractors, modified to look like the hulking haunches of Japan’s famed Sumo grapplers, farm union leaders have signalled that this time they are ready to wrestle the government into the ground. A few ominous warning shots have already drawn blood.

As an unfortunate consequence, the once-bitten-twice-shy union government has also raised the drawbridges. Thousands of security personnel are standing vigil behind barricades that are suited better to a Ukrainian battleground.

At the borders, the scene could be straight out of the medieval ages as the embattled meanly eyeball each other from behind their respective front lines.

But before anyone could blink, the Congress party’s most recognisable face Rahul Gandhi has plunged headfirst into this simmering stalemate.

Rahul Gandhi has promised farmers that if voted to power in the summer of 2024, his government’s first executive decision will be to bring a law guaranteeing a Minimum Support Price for their crops.

The Gandhi scion, who sees himself as the messiah of social justice, didn’t bother to think why his own party’s manifesto and erstwhile government stopped short of endorsing similar recommendations in 2010.

Indeed, let alone backing a law guaranteeing MSP, the UPA, steered by the economist extraordinaire Dr Manmohan Singh, wasn’t even ready to accept the proposal to hand out an “increased support price of at least 50% on cost as that may distort the market”.

The operational word is “distort” the market. We should be thankful that Rahul Gandhi wasn’t the finance minister under the UPA. Given that the UPA itself metaphorically kicked the MSP ball down the road, Rahul Gandhi has no moral authority to now reprise the role of the proverbial “annadata” to the kisan.

Just like the UPA’s financial brains trust, economists unanimously agree that bringing a law guaranteeing MSP will crash the economy.

The numbers to be paid out will equal all the money the government has set aside to build infrastructure throughout the nation.

Worse, the law will not allow the markets to operate. Ashok Gulati, who worked on setting the NDA’s support price for crops, says that when “market prices are higher than MSP, farmers end up losers. So, they clamour for higher and higher MSP, based on unrealistic costs. The difference between what farmers want and the Centre’s current cost calculations for MSP is about 25-30 per cent in most crops. Is the country ready to face food inflation of 25-30 per cent if farm union demands of MSP based on comprehensive cost are accepted?”

Remember the “M” in MSP stands for “minimum” and not “maximum”.

There is no one-size-fits-all solution. And that’s why the issue cannot be left to be decided by hotheads running amok on the streets holding a virtual gun to the government’s head.

Backing any union that weaponises the demand for a law guaranteeing MSP is to encourage the rule of the mob.

There’s no doubt that farmers, especially in Punjab and Haryana, are in distress. In general, analysts point out that “farmers, for the most part, operate in a buyer’s market. Since their crops — barring maybe milk — are harvested and marketed in bulk, it leads to sudden supply increases relative to demand, putting downward pressure on prices. Such market conditions, favouring buyers over sellers, also mean farmers are price takers, not price makers.”

Recognising their grievances, the government set up a committee in 2022. Besides the MSP conundrum, the committee is also examining two other related issues – natural farming and crop diversification.

The committee met for the first time on August 22, 2022, but the farm unions that forced the government to set it up in the first place have not joined it. Now, one of their splinter units has laid siege to Delhi.

This of course raises questions about their motives. Also, of course, the motives of opposition politicians who are supporting the truculence of truant farm unions.

The hypocrisy and duplicity is for all to see. The NDA must hold its nerve and its line in the face of a ruinous MSP or “Maximum Subsidy Politics”.