Farmers protest: Rahul Gandhi backs Swaminathan report but Congress had a different tone in 2010

Farmers protest news: Rahul Gandhi on Tuesday said that the Congress would provide farmers with a legal guarantee of minimum support price (MSP) for crops as per the Swaminathan Commission if it wins the Lok Sabha elections and forms the government at the Centre. He further claimed that this move would change the lives of around 15 crore farmer families. 

"Farmer brothers, today is a historic day! Congress has decided to give legal guarantee of MSP to every farmer on crops as per Swaminathan Commission. This step will change the lives of 15 crore farmer families by ensuring their prosperity," Gandhi said. 

While Rahul Gandhi is promising MSP to farmers in the election season, the Congress party had a drastically different take regarding the same when it was in power. In 2010, the UPA government rejected the Swaminathan Commission's recommendations for MSP. 

What did the Congress say on MSP in 2010?

KV Thomas, the then Minister of State for Agriculture, told the Rajya Sabha that the recommendation was rejected because "MSP is recommended by the Commission for Agricultural Costs and Prices (CACP) based on objective criteria and considering variety of relevant factors. Hence, prescribing an increase of at least 50 per cent on cost may distort the market. A mechanical linkage between MSP and the cost of production may be counter-productive in some cases."

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What does the Swaminathan report say? 

Among many things, the protesting farmers are pushing for the implementation of the Swaminathan Committee report. The National Commission of Farmers, led by late Bharat Ratna M S Swaminathan, recommended that the minimum support price should be at least 50 per cent more than the comprehensive cost. 

As per this commission's report, there are three variables to determine the production cost. A2 is out-of-pocket expenses met by farmers, which include loans for fertilisers and fuel as well as cost of leasing land. A2+FL refers to the value of unpaid labour such as contribution of family members and others, an addition to paid-out cost. 

C2 is the actual cost of production, including account rent and interest foregone on land and machinery owned by farmers. As per the Commission, the formula to calculate MSP would be: MSP= C2+ 50 per cent of C2. 

Cost of MSP to the exchequer

While the farmers' demand may seem germane at face value, it is not feasible for the government to go ahead with it. Granting farmers the minimum support price (MSP) for their produce could cost the Centre a massive Rs 10 lakh crore, sources told Business Today.

They said that the total value of agricultural produce in FY20 was Rs 40 lakh crore, which included produce from dairy, farming, horticulture, livestock and MSP crops. The agricultural produce's market value was Rs 10 lakh crore.

As per sources, this is almost equivalent to the Rs 11.11 lakh crore the government has earmarked for infrastructure in the interim budget. They further said that additional money, if guarantee is made, will have to be either cut in spending in infrastructure and defence or more taxation through direct and indirect taxes. 

Sources said: "Rs 10 lakh crore is also more than the annual average expenditure the government has had in infrastructure in the last seven fiscal years (Rs 67 lakh crore, between 2016 and 2023). They said a universal MSP demand did not make any economic or fiscal sense, and was a "politically motivated argument against the government which has had an extensive welfare record for the last ten years".