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Punjab procurement agencies in fix

chandigarh Updated: Oct 12, 2013 09:27 IST

Procurement agencies of Punjab are in a Catch-22 situation.

For the past 11 crops since the kharif season of 2008, five agencies pay 3% infrastructure development (ID) cess to the state government on total procurement, while the union ministry of food and public distribution reimburses them only 2%. State procurement agencies Punsup, Punjab Agro Industries Corporation, Pungrain, Markfed, and Punjab Warehousing Corporation, thus, have accumulated a loss of more than Rs 800 crore, so far.

On September 24, 2008, the Punjab government increased the ID cess to 3%, which only in April that year, had moved from 1 to 2%. The union ministry for food and public distribution, on whose behalf the state agencies procure food-grains, objected to the second quick increase in the cess and continued to reimburse at 2% rate.


A farmer waiting in the grain market for procurement of his produce

The Punjab government moved the Punjab and Haryana high court, which decided in the favour of the state government, at which, the union government moved the Supreme Court. "The union government takes the plea that the decision is pending in the apex court, so it will not reimburse at 3% rate.

The state government, however, has spent a lot on building roads and grain markets for smooth procurement, and revenue generation is dependent heavily on the ID cess," said state secretary for food and civil supplies DS Grewal.


Strong winds and heavy rainfall have added to the woes of farmers in many parts of the state.

(In Pic) A farmer showing his satnding damaged crops in Dakala

"We are facing huge losses but have no option but to follow the state government's system," said a senior official in a procurement agency. He hoped that the Supreme Court decided in Punjab's favour, and after that, all dues would be cleared. "So far, we are managing by overdrawing from the limit the union government sets before each procurement season," he added.

State such as Haryana, Madhya Pradesh and Uttar Pradesh don't charge any ID cess, and the union government refers to these states in contesting Punjab's demand as "unjustified". From time to times, it has asked the state to cut taxes. Other than 3% ID cess, the state charges the agencies 5% purchases tax, 2% rural development cess, and 2% market fee, taking the total tax to 12%.


Farmers covering paddy crops at grain market as strong winds hit Jalandhar

The government had no other source of income than agriculture, said Punjab Agricultural Marketing board (mandi board) vice-chairman Ravinder Cheema. "Punjab sends 90% of its food grain to the other states. The other states have coal and minerals from which they get huge royalty but Punjab's case is peculiar, which the union government should keep this in mind while dealing with us," he said.