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In a landmark judgment on April 12, 2012, the Supreme Court upheld the constitutional validity of the provision in the Right to Education Act, 2009 that makes it mandatory for all schools (government and private) except private, unaided minority schools to reserve 25% of their seats for children belonging to “weaker section and disadvantaged group”.  The verdict was given by a three-judge bench namely Justice S.H. Kapadia (CJI), Justice Swatanter Kumar and Justice K.S. Radhakrishnan.  However, the judgment was not unanimous.  Justice Radhakrishnan gave a dissenting view to the majority judgment. According to news reports (here and here), some school associations are planning to file review petitions against the Supreme Court order (under Article 137 of the Constitution, the Supreme Court may review any judgment or order made by it.  A review petition may be filed if there is (a) discovery of new evidence, (b) an error apparent on the face of the record, or (c) any other sufficient reason). In this post, we summarise the views of the judges. Background of the petition The 86th (Constitutional Amendment) Act, 2002 added Article 21A to the Constitution which makes it mandatory for the State to provide free and compulsory education to all children from the age of six to 14 years (fundamental right).  The Parliament enacted the Right of Children to Free and Compulsory Education Act, 2009 to give effect to this amendment. The Act provides that children between the ages of six and 14 years have the right to free and compulsory education in a neighbourhood school.  It also lays down the minimum norms that each school has to follow in order to get legal recognition.  The Act required government schools to provide free and compulsory education to all admitted children. Similarly, aided schools have to provide free and compulsory education proportionate to the funding received, subject to a minimum of 25%. However, controversy erupted over Section 12(1)(c) and (2) of the Act, which required private, unaided schools to admit at least 25% of students from SCs, STs, low-income and other disadvantaged or weaker groups.  The Act stated that these schools shall be reimbursed for either their tuition charge or the per-student expenditure in government schools, whichever is lower.  After the Act was notified on April 1, 2010, the Society for Unaided Private Schools of Rajasthan filed a writ petition challenging the constitutional validity of this provision on the ground that it impinged on their right to run educational institutions without government interference. Summary of the judgment Majority The Act is constitutionally valid and shall apply to (a) government controlled schools, (b) aided schools (including minority administered schools), and (c) unaided, non-minority schools.  The reasons are given below: First, Article 21A makes it obligatory on the State to provide free and compulsory education to all children between 6 and 14 years of age.  However, the manner in which the obligation shall be discharged is left to the State to determine by law.  Therefore, the State has the freedom to decide whether it shall fulfill its obligation through its own schools, aided schools or unaided schools.  The 2009 Act is “child centric” and not “institution centric”.  The main question was whether the Act violates Article 19(1)(g) which gives every citizen the right to practice a profession or carry out any occupation, trade or business.  However, the Constitution provides that Article 19(1)(g) may be circumscribed by Article 19(6), which allow reasonable restriction over this right in the interest of the general public.  The Court stated that since “education” is recognized as a charitable activity [see TMA Pai Foundation vs State of Karnataka (2002) 8 SCC 481] reasonable restriction may apply. Second, the Act places a burden on the State as well as parents/guardians to ensure that every child has the right to education.  Thus, the right to education “envisages a reciprocal agreement between the State and the parents and it places an affirmative burden on all stakeholders in our civil society.”  The private, unaided schools supplement the primary obligation of the State to provide for free and compulsory education to the specified category of students. Third, TMA Pai and P.A. Inamdar judgments hold that the right to establish and administer educational institutions fall within Article 19(1)(g).  It includes right to admit students and set up reasonable fee structure.  However, these principles were applied in the context of professional/higher education where merit and excellence have to be given due weightage.  This does not apply to a child seeking admission in Class I.  Also, Section 12(1)(c) of the Act seeks to remove financial obstacle.  Therefore, the 2009 Act should be read with Article 19(6) which provides for reasonable restriction on Article 19(1)(g).  However, the government should clarify the position with regard to boarding schools and orphanages. The Court also ruled that the 2009 Act shall not apply to unaided, minority schools since they are protected by Article 30(1) (all minorities have the right to establish and administer educational institutions of their choice).  This right of the minorities is not circumscribed by reasonable restriction as is the case under Article 19(1)(g). Dissenting judgment Article 21A casts an obligation on the State to provide free and compulsory education to children of the age of 6 to 14 years.  The obligation is not on unaided non-minority and minority educational institutions.  Section 12(1)(c) of the RTE Act can be operationalised only on the principles of voluntariness, autonomy and consensus for unaided schools and not on compulsion or threat of non-recognition.  The reasons for such a judgment are given below: First, Article 21A says that the “State shall provide” not “provide for”.  Therefore, the constitutional obligation is on the State and not on non-state actors to provide free and compulsory education to a specified category of children.  Also, under Article 51A(k) of the Constitution, parents or guardians have a duty to provide opportunities for education to their children but not a constitutional obligation. Second, each citizen has the fundamental right to establish and run an educational institution “investing his own capital” under Article 19(1)(g).  This right can be curtailed in the interest of the general public by imposing reasonable restrictions.  Citizens do not have any constitutional obligation to start an educational institution.  Therefore, according to judgments of TMA Pai and PA Inamdar, they do not have any constitutional obligation to share seats with the State or adhere to a fee structure determined by the State.  Compelling them to do so would amount to nationalization of seats and would constitute serious infringement on the autonomy of the institutions. Rights guaranteed to the unaided non-minority and minority educational institutions under Article 19(1)(g) and Article 30(1) can only be curtailed through a constitutional amendment (for example, insertion of Article 15(5) that allows reservation of seats in private educational institutions). Third, no distinction can be drawn between unaided minority and non-minority schools with regard to appropriation of quota by the State. Other issues related to the 2009 Act Apart from the issue of reservation, the RTE Act raises other issues such as lack of accountability of government schools and lack of focus on learning outcomes even though a number of studies have pointed to low levels of learning among school children.  (For a detailed analysis, please see PRS Brief on the Bill).

Recently, the Cabinet Committee on Economic Affairs approved an increase in the Minimum Support Prices (MSPs) for Kharif crops for the 2018-19 marketing season.  Subsequently, the Commission for Agricultural Costs and Prices (CACP) released its price policy report for Kharif crops for the marketing season 2018-19.

The central government notifies MSPs based on the recommendations of the CACP.  These recommendations are made separately for the Kharif marketing season (KMS) and the Rabi marketing season (RMS).  Post harvesting, the government procures crops from farmers at the MSP notified for that season, in order to ensure remunerative prices to farmers for their produce.

In this blog post, we look at how MSPs are determined, changes brought in them over time, and their effectiveness for farmers across different states.

How are Minimum Support Prices determined?

The CACP considers various factors such as the cost of cultivation and production, productivity of crops, and market prices for the determination of MSPs.  The National Commission on Farmers(Chair: Prof. M. S. Swaminathan) in 2006 had recommended that MSPs must be at least 50% more than the cost of production.  In this year’s budget speech, the Finance Minister said that MSPs would be fixed at least at 50% more than the cost of production.

The CACP calculates cost of production at three levels: (i) A2, which includes cost of inputs such as seeds, fertilizer, labour; (ii) A2+FL, which includes the implied cost of family labour (FL); and (iii) C2, which includes the implied rent on land and interest on capital assets over and above A2+FL.

Table 1 shows the cost of production as calculated by the CACP and the approved MSPs for KMS 2018-19.  For paddy (common), the MSP was increased from Rs 1,550/quintal in 2017-18 to Rs 1,750/quintal in 2018-19.  This price would give a farmer a profit of 50.1% on the cost of production A2+FL.  However, the profit calculated on the cost of production C2 would be 12.2%.  It has been argued that the cost of production should be taken as C2 for calculating MSPs.  In such a scenario, this would have increased the MSP to Rs 2,340/quintal, much above the current MSP of Rs 1,750/quintal.

Figure 1

Which are the major crops that are procured at MSPs?

Every year, MSPs are announced for 23 crops.  However, public procurement is limited to a few crops such as paddy, wheat and, to a limited extent, pulses as shown in Figure 1.

Figure 2

The procurement is also limited to a few states.  Three states which produce 49% of the national wheat output account for 93% of procurement.  For paddy, six states with 40% production share have 77% share of the procurement.  As a result, in these states, farmers focus on cultivating these crops over other crops such as pulses, oilseeds, and coarse grains.

Due to limitations on the procurement side (both crop-wise and state-wise), all farmers do not receive benefits of increase in MSPs.  The CACP has noted in its 2018-19 price policy report that the inability of farmers to sell at MSPs is one of the key areas of concern.  Farmers who are unable to sell their produce at MSPs have to sell it at market prices, which may be much lower than the MSPs.

How have MSPs for major crops changed over time?

Higher procurement of paddy and wheat, as compared to other crops at MSPs tilts the production cycle towards these crops.  In order to balance this and encourage the production of pulses, there is a larger proportional increase in the MSPs of pulses over the years as seen in Figure 2.  In addition to this, it is also used as a measure to encourage farmers to shift from water-intensive crops such as paddy and wheat to pulses, which relatively require less water for irrigation.

Figure 3

What is the effectiveness of MSPs across states?

The MSP fixed for each crop is uniform for the entire country.  However, the production cost of crops vary across states.  Figure 3 highlights the MSP of paddy and the variation in its cost of production across states in 2018-19.

Figure 4

For example, production cost for paddy at the A2+FL level is Rs 702/quintal in Punjab and Rs 2,102/quintal in Maharashtra.  Due to this differentiation, while the MSP of Rs 1,750/quintal of paddy will result in a profit of 149% to a farmer in Punjab, it will result in a loss of 17% to a farmer in Maharashtra.  Similarly, at the C2 level, the production cost for paddy is Rs 1,174/quintal in Punjab and Rs 2,481/quintal in Maharashtra.  In this scenario, a farmer in Punjab may get 49% return, while his counterpart in Maharashtra may make a loss of 29%.

Figure 5

Figure 4 highlights the MSP of wheat and the variation in its cost of production across states in 2017-18. In the case of wheat, the cost of production in Maharashtra and West Bengal is much more than the cost in rest of the states.  At the A2+FL level, the cost of production in West Bengal is Rs 1,777/quintal.  This is significantly higher than in states like Haryana and Punjab, where the cost is Rs 736/quintal and Rs 642/quintal, respectively.  In this case, while a wheat growing farmer suffers a loss of 2% in West Bengal, a farmer in Haryana makes a profit of 136%.  The return in Punjab is even higher at 1.5 times or more the cost of production.