After somehow managing to pay farmers the minimum support price (MSP) for wheat after fighting for cash credit limit (CCL), the Punjab government now struggles for the transfer of Rs 1,700 crore worth of various taxes on procurement from the Centre.
The 14.5% state tax on the procurement of wheat (the same on paddy) for the Centre comprises 2% rural development fund (RDF), 3% infrastructure-development (ID) cess, 5% value-added tax (VAT), 2% market fee, and 2.5% commission agent fee. Of the total tax imposed on the MSP paid to the farmers, 2.5% has gone to the commission agents, so far, and 12% is awaited.
The Centre has promised to transfer the tax into the government treasury directly but fixed no deadline. The sum is a major factor driving the state’s agrarian economy and late payment would delay development works. Punjab chief minister Parkash Singh Badal has asked the Centre to rush the payment and got a reply that it would be sent to different state
departments based on the breakdown decided by the state. The state is in the process of sending requisition.
In the earlier procurement seasons, the tax used to come with the CCL. “We have disbursed about Rs 14,500 crore to the farmers for about 90-lakh tonne wheat procured through our five agencies,” said state nodal agency Pungrain’s adviser Maniit Singh Sarang, adding: “More than 95% procurement and disbursement of MSP is done.
Of more than 107-lakh-tonne wheat procured in Punjab, state agencies (state warehousing corporation, Markfed, Pungrain, Punsup, and Agro Industries Corporation) account for about 90-lakh tonnes. The FCI has procured another about 170-lakh-tonnes. The Centre also pays tax on wheat that the FCI buys from the state.
Securing CCL wasn’t easy, as the Centre wanted the state to account for the outstanding Rs 20,000 crore first. The Reserve Bank of India cautioned 60 banks that funds procurement against releasing the amount.