Farmers to partially benefit from MSP, says Ind-Ra
12/07/2018 10:05
The current problem faced by farmers is essentially an agricultural distress and not a generalised rural distress, and farmers’ distress is essentially emanating from shrinking agricultural margins, says India Ratings and Research (Ind-Ra).

Ind-Ra analysed the data for three periods: FY04-FY08, FY09-FY13 and FY14-FY18. In the analysis, agricultural gross value added/growth in minimum support price (MSP) of rice and wheat has been considered a proxy for an increase in output prices, while growth in agricultural wages has been considered a proxy for an increase in input prices. While FY04-FY08 is characterised by low wage growth and relatively high agricultural output/MSP growth translating into higher margins, FY09-FY13 is characterised by agricultural output/MSP growth comparable with that in FY04-FY08 but high wage growth eroding margin growth.

Meanwhile, FY14-FY18 is characterised by moderate agricultural output/MSP growth and almost similar wage growth, indicating thin margin growth for agricultural activity.