Slide 1

What Is C2+50% Formula On MSP By

Swaminathan Commission That Farmers
Are Protesting For

Slide 2
Let’s begin with who is swaminathan and what is his model of MSP?

● M.S.Swaminathan was an Indian agronomist and agricultural scientist and also

the chairman of 'National Commission on Farmers'.
● The Swaminathan Commission Report submitted on October 2006, states that
the government should raise the MSP to at least 50% more than the weighted
average cost of production. It is also known as the C2+ 50% formula.

Slide 3
What is the main demand that farmers are protesting for?

In 2020, farmers protested against three farm laws passed by the government, at
Delhi borders, leading to their repeal in 2021.

Now Farmers from Punjab, Haryana, and Uttar Pradesh are marching towards Delhi in
the 'Delhi Chalo' protest, demanding legal guarantees for the Minimum Support Price
(MSP)

Slide 4
Before The Commission for Agricultural Costs & Prices (CACP), an attached office of
the union agricultural ministry, suggests MSPs for specific crops. The CACP includes
mainly 2 types of cost of production :-

1.'A2':
• Covers all paid-out costs directly incurred by the farmer in cash and kind on seeds,
fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
Slide 5
2. 'FL:
• Includes A2 plus an'imputed value of unpaid family labour.

CACP considers A2+FL as the cost of production and sets MSP at 1.5 times of it.

But now they are demanding the implementation of C2+50% formula by Swaminathan
commission

Slide 6
What's C2+50% Formula On MSP?
The C2+50% formula on MSP is an idea put forward by the Swaminathan Commission
is to give farmers the imputed cost of capital and the rent on the land (called ‘C2’ ) to
give farmers 50% returns.
● Imputed cost is used to account for the opportunity cost of using resources like
land, labour, and capital.
● The imputed cost of capital accounts for the interest or returns that could have
been earned if the capital invested in farming were instead invested elsewhere.

C2 = A2 + FL + imputed cost + 50%(A2+FL+imputed cost)

Slide 7
Here’s a table showing the difference in old and new MSP which is going from 9% to
40%.
Slide 8
What are the effects or challenges faced if the new MSP is imposed :-
● A law guaranteeing minimum support price (MSP) for all crops produced in the
country, as protesting farmers are demanding, would mean a burden of Rs 40
lakh crore on the government, calculations show.
● Even on the presently MSP-mandated crops would itself mean a payout of nearly
Rs 10 lakh crore, which is equivalent to the entire capital expenditure budget of
the central government in the forthcoming financial year,

Slide 9
Other challenges:-
● It is hard to calculate rent in some parts of india and even if it is possible, a
farmer in Delhi will have much higher rent then the one in Odisha, this will again
 create discrimination because according to the C2+50%, the farmers in Odisha
get low MSP as Compared to one in Delhi or Pune.
● The farmers will start producing more irrespective of the demand to sell them on
at least MSP and cover their costs while gaining some profit.
● Experts have said that imposing MSP could affect the India’s export and it will
lead to create inflation.