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Sitharaman counters LoP on farmers, food security & data

February 12, 2026 5 min read Economics Social Issues GS3 (Agriculture Food Security) GS2 (Government Policies)
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What Happened

  • During the Union Budget 2026-27 debate in the Lok Sabha, the Finance Minister responded to the Leader of Opposition's allegations that the government had "sold the interests of farmers and the poor."
  • The Finance Minister stated that the government has allocated Rs 2.27 lakh crore to food subsidy and continues providing free food to 80 crore people under the National Food Security Act.
  • Rs 4,064 crore was allocated to the Ministry of Food Processing Industries and Rs 350 crore for high-value agriculture.
  • The Finance Minister noted that food inflation under the current government was lower compared to 10-11% during the previous UPA regime.
  • The Finance Minister also referenced the WTO food stockholding issue, arguing that the previous government had signed a WTO Trade Facilitation Agreement that constrained food procurement from farmers after 2017, while the current government secured a "peace clause" allowing continued procurement and free ration distribution.

Static Topic Bridges

The National Food Security Act, 2013 provides a legal framework for food security in India by giving citizens the right to receive subsidised foodgrains through the Targeted Public Distribution System (TPDS). It was enacted on September 12, 2013, converting the existing food security programmes from welfare schemes into legal entitlements.

  • Coverage: Up to 75% of rural population and 50% of urban population -- approximately 81.35 crore persons (Census 2011 basis), covering about 67% of India's total population
  • Two categories: Antyodaya Anna Yojana (AAY) households receive 35 kg per family per month; Priority Households receive 5 kg per person per month
  • Subsidised prices originally set at: Rice Rs 3/kg, Wheat Rs 2/kg, Coarse grains Rs 1/kg (Section 3(1))
  • Since January 2023 under PM Garib Kalyan Anna Yojana (PMGKAY), free foodgrains are provided to all NFSA beneficiaries (extended from the COVID-era free ration programme)
  • Nutritional support: Pregnant women and lactating mothers entitled to free meals and maternity benefit of not less than Rs 6,000 (Section 4); children aged 6 months to 14 years entitled to free meals through Anganwadis and mid-day meal scheme (Section 5)
  • Grievance redressal: Mandates appointment of District Grievance Redressal Officers and State Food Commissions
  • Constitutional basis: Article 21 (Right to Life, interpreted to include right to food) and Article 47 (DPSP -- nutrition and standard of living)

Connection to this news: The Finance Minister's claim of providing free food to 80 crore people operates through the NFSA framework, now supplemented by PMGKAY. The Rs 2.27 lakh crore food subsidy allocation reflects the fiscal cost of implementing these entitlements.

MSP Mechanism and the CACP Framework

The Minimum Support Price (MSP) is the price at which the government procures crops from farmers to ensure they receive a minimum guaranteed return. MSP is recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs (CCEA).

  • CACP established: 1965 (as Agricultural Prices Commission, renamed 1985); attached office under Ministry of Agriculture & Farmers Welfare
  • Composition: Chairman, Member Secretary, one Official Member, two Non-Official Members (farming community representatives)
  • Covers 23 commodities: 7 cereals, 5 pulses, 7 oilseeds, 4 commercial crops (sugarcane, cotton, copra, raw jute)
  • MSP formula: Since 2018-19, set at minimum 1.5 times the comprehensive cost of production (A2+FL cost), following the Swaminathan Commission recommendation
  • A2+FL includes: actual paid-out costs (A2) + imputed value of family labour (FL); C2 cost additionally includes imputed rental value of owned land and interest on owned capital
  • Procurement agencies: Food Corporation of India (FCI) for cereals; NAFED, CCI for other crops
  • MSP has no statutory backing -- it is an administrative price support mechanism
  • PM-KISAN: Pradhan Mantri Kisan Samman Nidhi launched February 2019 provides Rs 6,000 per year in three instalments to all landholding farmer families; over 11 crore beneficiaries, total disbursement exceeding Rs 2.60 lakh crore

Connection to this news: The budget debate centred on whether government agricultural support adequately serves farmers. The MSP-procurement-distribution chain is the backbone of India's food security architecture, and the food subsidy allocation of Rs 2.27 lakh crore largely funds grain procurement at MSP and its distribution through NFSA.

WTO Peace Clause on Public Stockholding for Food Security

At the 2013 WTO Bali Ministerial Conference, members agreed on an interim "peace clause" that protects developing countries' public stockholding programmes from legal challenge under WTO dispute settlement, even if the domestic support exceeds the ceilings specified in the Agreement on Agriculture (AoA). India was the strongest proponent of this provision.

  • Agreement on Agriculture (AoA): Part of the Uruguay Round (1994), sets limits on domestic support (Aggregate Measurement of Support or AMS) -- India's de minimis limit is 10% of the value of production
  • Problem: India's procurement at MSP for NFSA distribution could breach the 10% de minimis limit due to the AoA's outdated 1986-88 reference prices used for calculating support
  • Bali Decision (2013): Interim peace clause -- no WTO member shall challenge procurement for public stockholding programmes in dispute settlement
  • General Council Decision (November 2014): Made the peace clause effectively permanent until a permanent solution is found
  • India invoked the peace clause for rice procurement for the first time in 2020, notifying that its rice procurement support exceeded the de minimis threshold
  • Trade Facilitation Agreement (TFA): India linked its ratification of the TFA to progress on a permanent solution for public stockholding
  • Permanent solution remains unresolved despite discussions at MC11 (Buenos Aires, 2017), MC12 (Geneva, 2022), and MC13 (Abu Dhabi, 2024)

Connection to this news: The Finance Minister's reference to the WTO food stockholding issue highlights the tension between India's domestic food security obligations (NFSA, free rations to 80 crore people) and international trade rules. The peace clause enables India to continue MSP-based procurement without fear of WTO challenges, and its permanence remains a key Indian negotiating priority.

Key Facts & Data

  • Food subsidy allocation (Budget 2026-27): Rs 2.27 lakh crore
  • Free food beneficiaries under NFSA/PMGKAY: 80 crore people
  • NFSA coverage: 75% rural, 50% urban population (approximately 81.35 crore on Census 2011)
  • NFSA enacted: September 12, 2013; entitlements: 5 kg/person/month (priority) or 35 kg/family/month (AAY)
  • CACP established: 1965; covers 23 crops; MSP set at minimum 1.5 times A2+FL cost since 2018-19
  • PM-KISAN: Launched February 2019; Rs 6,000/year; over 11 crore beneficiaries
  • WTO Bali Peace Clause: 2013 (interim), 2014 General Council decision (effectively permanent); India invoked it for rice in 2020
  • India's AoA de minimis limit: 10% of value of production
  • Ministry of Food Processing allocation: Rs 4,064 crore