Income Policy over Price Policy

It may be the time to consider guaranteeing minimum basic income to farmers through an act of Parliament instead of repealing the new farm laws and guarantee minimum support price (MSP). The new farm bills are pro-market and in line with the changing times. We are in a globalised and free market era; India sooner or later has to open its agricultural markets to world markets to take advantage of the global demand for agricultural commodities as a leading agricultural player in the world. Legalising the MSP goes against the free markets in the agricultural sector. Under these changed times, ensuring farmers’ incomes through the price policy is not practical; it will lead to inefficiencies in agriculture and India may lose competitive advantage in the ever-expanding global economy. However, it is the obligation of the government to ensure farmers’ incomes and livelihoods. Most of the countries are shifting from price policies to income policies to ensure farmers’ incomes by adopting a sort of a universal basic income (UBI).

The UBI is a regular, unconditional cash payment given to all households of a country. The idea of UBI originated in the West to ensure a minimum guaranteed income to every citizen of the country. Most of the developing countries are also using a modified form of it to ensure farmers’ income. It is expected to protect farmers from the looming threat of highly fluctuating and also declining agricultural prices. The basic advantage of the scheme is that it does not intervene in the functioning of agricultural markets and allows free markets. Unlike loan waivers, it does not impair credit culture, and unlike the MSP for crops, it does not encourage one crop against another to be cultivated. It also avoids enormous, complex and costly administrative procedures, leakages and lethargies in implementing schemes like procurement of grains and distribution under the public distribution system (PDS).