Congress party recently announced the ‘Armoor Declaration’ which contained three major promises for farmers. One of them is minimum guaranteed prices for 17 crops in Telangana. Farm price supports are predicated on the belief that farmers, as a group, have below-average incomes. Farm price supports do not accomplish the intended purpose of helping the farmers who need help, because the benefits are received in proportion to the amount sold on the market, so the largest benefits go to the wealthiest farmers; and the benefits that farmers actually receive are smaller than the total amounts spent.
Same issue with ‘RYTHU BANDHU’
This is clearly true of the amount spent for storage and similar costs which does not go to the farmer at all—indeed the suppliers of storage capacity and facilities may well be the major beneficiaries.
This policy, then, amounts to a clear case of welfare-for-the-well-off: tremendous distortions in the price system and an appalling waste of resources in order to provide benefits for people who are not particularly poor.