FCI paid Rs 7500 crore as taxes to states on grain procurement

FCI paid Rs 7500 crore as taxes to states on grain procurement

Our Bureau
New Delhi, Dec 22:

The Food Corporation of India (FCI) has paid more than Rs 7500 crore in the last fiscal to states as taxes or levies on the grain procurement.

According to a statement submitted in Lok Sabh by the food minster Ram Vilas Pawan recently, the FCI paid more than Rs 3567 crore and Rs 1796 crore respectively as taxes to Punjab and Haryana in 2013 – 14. These two states contribute the highest amount of foodgrain mostly consisting of rice and wheat to the centre’s procurement drive.

The government agency also paid taxes or levies worth of Rs 1038 crore to Andhra Pradesh and Rs 334 croe to Chhattisgarh government in last fiscal.

As per the food ministry data, FCI had paid Rs 6109 crore as taxes or levies to states in 2011-12.

In the five largest grain-producing states with a surplus – Punjab, Haryana, Andhra Pradesh, Chhatisgarh and Odisha, these levies account for 10-15% of the minimum support price (MSP) given to farmers..

The highest taxes imposed on grain procurement are in the states such as Punjab (14.5%), Andhra Pradesh (12.5%), Haryana (11.5%), Odisha (12%) and Chhattisgarh (9.7%).

Terming that high rate of taxes or levies on grain procurement leads to rise in procurement costs of FCI, Paswan said ,”time to time we have requested states governments for reduction of taxes being imposed by them and since theses taxes or levies are statutory in nature, it it not possible for the government to take any unilateral decision on the matter.”

The Commission for Agricultural Costs and Prices (CACP) in its price policy for rabi crops for the marketing season 2014-15 had stated “the centre needs to review its open ended procurement policy and take a policy decision to limit procurement from states that imposes taxes and levies beyond 5% of MSP,”.

“This is necessary step to bring about rationality in pricing, contain the food subsidy bill and ‘getting the markets rights’, CACP had observed in its report.

However, Ashok Gulati, former chairman of CACP said ‘the higher taxation and levies drive out the private players from grain purchase and distort the market, impacting processing and value-added industry.’

A food ministry official said that the state government needs to reduce high state-level taxes in a phased manner as these levies are also adding to the country’s food security bill. “But we also acknowledge that these taxes on procurement are the key sources of revenue specially for Haryana, Punjab and other states,” the official noted.

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