The new Minimum Support Price (MSP) formula, being worked out by the Narendra Modi-led NDA government, is likely to be based on the less ambitious A2+FL (family labour) costs and not the comprehensive C2 as demanded by many farmer groups in the country.

“A2+FL has been used as the base for working out new MSP rates. It has taken into consideration all input costs, including rent on hired machinery and animals, and cost of labour, including that of those from the family, while arriving at the formula. As it has been planned, the MSP of crops would be at least 1.5 times of these costs incurred,” NITI Aayog member Ramesh Chand told reporters here on Tuesday.

However, unlike in the past, the government will make sure that the MSP would be honoured and farmers would get at least the floor price for their produce, Chand said while participating in an event to brief the media about achievements of the policy thinktank in the last four years.

Even though MSP has been in force for nearly 50 years, enforcing the floor price has been a major challenge, he said.

NITI Aayog Vice-Chairman Rajiv Kumar, also present at the meeting, categorically ruled out the inclusion of land rent, as recommended by MS Swaminathan-led National Commission on Farmers earlier, for calculating the MSP.

Land rentals in the country vary from place to place and thus arriving at a national average is extremely difficult, he said adding that this makes implementation of the Swaminathan commission impractical.

However, this was contrary to the promise made by Prime Minister Narendra Modi in his Mann ki Baat on March 25. In his radio talk, he had promised farmers that ground rent on leased land and land revenue paid to State governments would be taken into consideration while formulating MSP for different crops.

No impact on inflation

The NITI Aayog officials argued that implementation of new MSP rates, expected to be announced later this week, will not have much impact on inflation. “Our core inflation, which doesn’t take into account food and fuel, is higher than headline inflation, where both food items and fuel are included. Therefore, there can be ways in which inflation can be managed,” Kumar said.

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