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Many economists and experts opined that agriculture is an unprofitable activity in India nowadays, mainly because of increasing cost and low prices of farm produce. However, during the field survey in Galsi-I and Galsi-II Blocks of Purba Bardhaman, it was observed that many farmers do not think so. In this context, using the secondary data on the cost of paddy cultivation for the period 1996–97 to 2015–16, this paper analyses the cost and returns from paddy cultivation in West Bengal. It is observed that the cost has increased at a very high rate. Paid out cost at current prices during the last decade has increased by 12.1 per cent per annum. However, they do not realise the right price of their produce, and consequently, the profit margin has declined. Data reveal that farmers incurred losses in paddy cultivation upto 14 times except for in 2007–08 and in 2009–10 during 2000–01 to 2015–16. They are also being deprived of getting even the minimum support prices (MSP) due to loopholes in government initiatives. Using primary data, this paper explains why many farmers think that paddy cultivation is still a profitable activity. In doing so, the research finds that they miscalculate the cost of cultivation and that is why they perceive the profit margin to be higher. The kinds of cost that they do not calculate include family labour, depreciation charge, interest on capital, the rental value of owned land, and others. Another cause for exaggerated profit is that farmers include income from paddy business as return from agriculture.
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