In fact, the MSP for wheat for the current season should be announced soon. The government should also announce MSPs for various crops before the sowing season begins so that farmers can plan their cropping pattern.

The unrealistic rise in the government's procurement price for wheat since 1992 has contributed to inflationary trends in the economy. It has hurt the poor, made Indian wheat uncompetitive in the global market, increased the economic cost of wheat held in the godowns of the Food Corporation of India (FCI), leading to poor offtake of grain from the central pool. Therefore, this is the time to cut down unnecessary hikes in MSPs for wheat and compute a rational price for procurement.

Out of the total quota for export of 40 lakh tonnes of wheat from the central pool, only 3.10 lakh tonne could be exported despite the subsidy given to exporters. The high price of wheat in the domestic market and poor quality of wheat procured has rendered exports unviable.

Since 1992, the government, under pressure from Punjab, has been hiking the MSP for wheat that was fixed scientifically by the Commission for Agricultural Costs and Prices (CACP). The recent report of the Comptroller and Auditor General of India (CAG) has also castigated the government for such populist and uneconomic decisions.

This year, and rightly so, the CACP has finally expressed its anguish. It has not recommended any MSP for wheat. The panel chief, Abhijit Sen, has gone on record saying that CACP did not find it necessary to recommend the MSP for wheat as the government had failed to honour its recommendations in the past. In fact, Dr Sen has refused a further extension offered to him and has relinquished his post. The suggestions of the CAG and CACP are sufficient indicators to the government to act in the right direction. But the question is: Will the government heed these suggestions or will it hike the MSP again, keeping in view the Assembly elections due in Punjab in March?

The agriculture minister, Nitish Kumar, is, however, beating about the bush on the issue. In an effort cover up the government's past mistakes, he has suggested that a separate committee be set up under Dr Sen's chairmanship to review and redefine the parameters that indicate the index of farmers' economic condition in the country. Mr Kumar should realise that this is only possible if the states set up their own panels to determine the `terms of trade' for farmers, as recommended by the expert committee way back in 1993.

No state government has set up such panels as yet. Setting up of another panel at the central level will only be a duplication of efforts being made by the existing CACP.

Moreover, the CACP recommendations regarding MSP for wheat are arrived at scientifically, taking into consideration the ground realities in the wheat-growing states of Punjab, Haryana and Uttar Pradesh. The government should ensure that there is no dissent from farmers belonging to these states.

Punjab farmers have always been major beneficiaries of the declared MSP for wheat, as is evident from the CAG report. The central agencies procure about 85 per cent wheat from Punjab, which produces only 20.4 per cent of the total wheat in the country.

In spite of these arrangements, the powerful lobby in Punjab seems to have always prevailed upon the Centre. In this context, the CAG report has said that "the central bonus for wheat announced in 1992-93 as one-time measure became a recurring phenomenon with its continuation in 1993-94 and after that in 1997-98 and 1998-99 at Rs 25, Rs 60 and Rs 55 per quintal, respectively. Even in the years when bonus was not announced, the MSP was set at a higher level than the previous procurement price. In 1998-99, the official purchase price of wheat was also higher than the ruling market price."

The report said that over a six-year period (1993-1999), the MSPs for wheat increased by 85 per cent whilst that for rice increased by only 65 per cent.

The report further stated: "The imbalance in the increase of MSP for wheat and rice has resulted in contra market price relationship between these two commodities. Wholesale prices for rice have been generally higher than wheat and international prices of rice have always been significantly higher than wheat. By 1998, wheat procurement prices were also higher than international prices. What price signal was being flashed by the unusually higher price for wheat remains unclear. This pricing policy was certainly not to the advantage of the consumer."

In the period 1992-1999, the annual change in MSP for wheat was 12.25 per cent whilst the annual change in market price for wheat was only 9.67 per cent. Comparatively, the variance between procurement price for rice and its market price is negligible. The annual change in procurement price in this period was 9.35 per cent against 10.35 per cent in the annual change in market prices. The annual change in total foodgrain prices has been 8.15 per cent whilst the wholesale prices of all commodities moved by 7.11 per cent annually.

Thus, there is every reason for the government to act judiciously and fix the MSP for wheat in the current season in the interests of the consumers and the country as a whole.