Assuring Farmers Income in the Context of New Farm Laws: Issues and the Way Forward

In India, the new farm laws are intended to opening up agricultural economy and exposing farmers to free market opportunities. On the fear of exposing to market volatility, farmers are agitating for guaranteed minimum support price. The paper analysed the farm laws by using secondary data collated from various government reports and literature. Although, MSP policy achieved its objective of providing assured prices for paddy and wheat farmers and also abundant supply of food grains, it neglected other crops like pulses, oilseeds, fruits and vegetables, resulted mass undernourishment among children and women. Under the existing MSP policy with complete focus on paddy and wheat with utter neglect of other crops, farmers of pulses and oilseeds are exposed to market vagaries and volatility, resulted in low production, low profitability and excessive dependence on imports. The paper suggested a modified MSP policy as price insurance. Although the new farm laws will help in encouraging much needed private investments in agricultural infrastructure like cold chains, warehouses, collection centres and aggregation centres, they cannot ensure stable and remunerative prices to farmers. Hence, there is a need for modifying the past MSP policy to safeguard the farmers from high volatility and also low prices. Although crop insurance schemes like Prime Minister Fasal Bhima Yojana (PMFBY) was in implementation, it covers only production risk with complete neglect of price risk. Under the new farm laws, the role of the MSP policy should be altered in such a way that (i) Procurement of paddy and wheat to meets the needs of procurement for food security, (ii) Price Deficiency Payment Scheme (PDPS) for remaining 21 crops and (iii) Provide signal price for crops with fragmented markets.