MOOC on Economic Viability of Indian Agriculture
Channel: Ramphul Ohlan
Date: 17/05/2021

The economic performance of agriculture business continues to be critical for India's growth story as it ensures food security to about 1.35 billion people, provides employment to over 55% of the workforce, and makes a contribution of about 15% to the country's Gross Domestic Product (GDP). The Government of India (GOI) has taken numerous policy initiatives to shift farming from the business-as-usual approach to farm profitability approach that goes beyond merely achieving the targeted production. The list of GOI’s recent policy initiatives includes Agricultural Export Policy 2018, National Mission for Sustainable Agriculture, Pradhan Mantri Kisan Samman Nidhi Yojana, Pradhan Mantri Fasal Bima Yojana, The Paramparagat Krishi Vikas Yojana, Livestock Insurance Scheme, and National Scheme on Welfare of Fishermen, etc. At the same time, the GOI has also been pursuing a highly ambitious target of doubling farmers' income by 2022. The most significant way of the GOI's intervention in the marketing of agricultural produce is the determination of Minimum Support Price (MSP) for different farm commodities and implementation thereof. For bringing an upward revision in MSPs, the GOI has recently adopted M.S. Swaminathan's Commission recommendation of providing 50% returns over cost of production. However, there exists a difference in opinions of different stakeholders on several economic models used by the Commission for Agricultural Cost and Prices (CACP) for estimating the cost of producing different crops. Nowadays, a clear understanding of the economic rationale of the of determination of MSP and standard mathematical models employed for estimating the cost of producing crops has become more important.