In his budget speech, Pranab Mukherjee sought credit for raising the Minimum Support Prices (MSP) for foodgrains over the last five years. Recently, addressing farmers’ rallies in his home state, Agriculture Minister Sharad Pawar also made similar claims stating that the rise in MSP for wheat from Rs 650 per quintal to Rs 1000 per quintal ensured that farm gate prices remained remunerative. This is a significant rise. But what is not told is that this price hike was made only after disconnecting Indian farmers from the international market by imposing an export ban. Farmers would have gained much more if they had access to the international market, as the international prices have remained higher than domestic prices during most of the UPA’s tenure. In fact, the government replenished its stocks by importing wheat at twice the price it pays to the domestic farmers. Curiously, the domestic suppliers were not allowed to participate in the bidding for government tenders. It is ironical that this policy of taxation of grain producers is being trumpeted as a pro-farmer policy.

The price of food presents an inevitable dilemma. High food price hurts poor consumers who are not protected by an effective food security cover. On the other hand, low food price hurts farmers who are also poor. Lowering the foodgrain prices even by a couple of rupees amounts to taxing away a few thousand crores of rupees from the rural economy. What the government policy should do regarding food prices inevitably entails a difficult moral dilemma. The real policy challenge is to resolve this dilemma and yet it is seldom reflected in the statements politicians make. Instead, they go back and forth between claims that alternate between posing as champions of farmers at one time and of consumers at another.

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