India: On Price Support for Farmers, Mainstream Economic Opinion Shifts from ‘Why’ to ‘How’

The historic mobilization of Indian farmers in 2020–21, which captured worldwide attention, was called off when the Indian government announced its decision to withdraw three controversial laws widely perceived as favoring corporations. While this year-long protest compelled the government to take an unprecedented step, it also brought increased scrutiny to India’s price support program, often referred to as the Minimum Support Price (MSP) policy. Over that year, media debates and editorials highlighted how this program—designed to ensure minimum price guarantees for 23 crops—has struggled due to poor implementation, inadequate public infrastructure, lack of political commitment, and the absence of legal guarantees.
Until 2021, mainstream economic opinion, often influenced by international organizations like the World Trade Organization, criticized the MSP policy as trade-distorting and contrary to free-market principles. However, the mass mobilization of millions of smallholder farmers has shifted the discourse from questioning the necessity of MSP to discussing how to implement it effectively. This shift represents a significant achievement and underscores the power of social movements to transform public opinion.
Persistent Challenges and Renewed Protest Calls
Despite the protest’s impact, farmers’ demand for legalizing the MSP remains unmet three years later. The recently released draft of the National Framework for Agricultural Marketing has raised concerns among farmer unions, who claim it closely resembles the withdrawn laws, casting doubt on the government’s true intentions.
Over the past two months, calls for renewed protests have grown louder. A prominent union leader from Punjab has been on a hunger strike for nearly 50 days, prompting even India’s Supreme Court to take notice. Reports suggest a churning among farmers in regions near the national capital, reminiscent of the early stages of the historic protests, which could escalate into another mass movement if the government remains unresponsive.
This time, activists and farmer organizations have proposed concrete measures to deliver price support effectively. Before exploring these proposals, it is worth examining where the Indian government’s priorities currently lie.
Contrasting State Support in the Neoliberal Era: Farmers vs. Corporations
Researchers argue that in 2022–23 alone, public sector banks wrote off loans and the government extended tax waivers to corporations amounting to $38 billion—nearly 1% of India’s nominal GDP. In contrast, providing MSP to India’s food producers would cost just a tenth of this amount. Farmers have long criticized this disparity, where state support for corporations is framed as “incentives,” while support for farmers is labeled a “liability” or “subsidy.” India’s small-scale food producers are central to the country’s food sovereignty and face significant risks, including unpredictable weather, pest infestations, and price volatility. While production-related risks cannot be entirely mitigated, the government can play a crucial role in protecting farmers from price volatility through policies like MSP.
Proposed Solutions for Delivering Price Support
Prominent economists and activists closer to protesting unions have put forth concrete proposals on how MSP can be implemented effectively. They have argued that making MSP a legal entitlement would obligate the state to ensure farmers receive the statutory price—whether selling to state-run agricultural markets or private buyers. Activists have repeatedly countered misinformation suggesting that farmers want the state to purchase all crops or penalize private buyers. Instead, their focus is on ensuring fair prices, irrespective of who the buyer is. The goal is not to punish private players but to regulate markets so that farmers receive the prices they deserve.
Here are the concrete proposals for delivering price support, that is now being actively debated in India.
1) Expand the Public Distribution System (PDS):
The Public Distribution System (PDS) in India is a government-run program that aims to provide affordable food and essential commodities to the poor and vulnerable sections of society. MSP is the price at which the government guarantees to purchase certain agricultural commodities (like wheat, rice, pulses, etc.) from farmers, regardless of market fluctuations. The government procures large quantities of food grains (such as rice and wheat) at MSP through agencies like the Food Corporation of India (FCI). These procured grains are then distributed through the PDS to vulnerable sections of society at subsidized rates. Currently, the PDS is heavily focused on rice and wheat. By broadening the food basket to include other crops covered under MSP—such as millets, pulses, and oilseeds—the government can incentivize farmers to diversify their production. A more diverse food basket in the PDS would also benefit undernourished populations, creating a win-win for farmers and the country’s poorest citizens.
2) Design State-led Market Intervention Schemes:
The government could introduce a well-funded market intervention scheme to stabilize prices when market rates fall below the MSP. This could involve purchasing limited quantities of crops to influence market prices, setting a floor price, adjusting international trade policies, or creating public storage facilities where farmers can store crops until prices recover.
3) A State-led Compensation Scheme
If crops are sold below the statutory price (MSP), the government could compensate farmers for the difference. Similar schemes have already been piloted in the Indian states of Haryana and Madhya Pradesh. Building on those experiences, the government could establish mechanisms to determine fair market prices, minimizing the risk of market manipulation or collusion. Alternatively, it could calculate a flat rate for deficit compensation based on average acreage sown and average productivity in a given region.
In the end, implementing effective price support mechanisms like MSP is not just an economic policy issue—it is a matter of justice and equity. What is now needed is the political will to meet the aspirations and demands of small-scale food producers who feed over a billion people in this region.
This article is compiled from various media sources.