M A I N   N E W S

Punjab, Haryana told to lower grain tax
Private players choose to go wheat shopping to UP, Rajasthan, MP & Gujarat
Ruchika M. Khanna/TNS

Chandigarh, April 19
The Centre has asked Punjab and Haryana to lower their tax structure and bring it on a par with that in other states so as to encourage more participation by private players in foodgrain procurement, according to highly-placed sources.

The tax structure in both Punjab and Haryana is the highest in the country. While Punjab charges the highest tax (13.5 per cent) on each quintal of wheat procured from its mandis, Haryana comes a close second by imposing 10.5 per cent tax (market fee, rural development fund, VAT, cess on VAT and arhtiya commission). Comparatively, the tax being charged in Uttar Pradesh is just 6.5 per cent and 3.6 per cent in Rajasthan, thus making the latter states more attractive for agri-corporates, who have started buying huge quantities of wheat there.

Incidentally, both states account for almost 80 per cent of the total foodgrain production in the country. Despite good quality of wheat and paddy, economic considerations have led to the private players buying foodgrains from other states like Uttar Pradesh, Rajasthan, Madhya Pradesh and Gujarat.

“In these states, the wheat quantity being procured by private traders is almost equal, and sometimes even more than the quantity procured by the state agencies, including the Food Corporation of India. Even now, during this rabi marketing season (RMS), private traders in Uttar Pradesh have bought 2.27 lakh metric tonnes (LMT) of wheat as compared to 1.12 LMT of wheat procured by the state agencies. In Rajasthan, private traders have picked up 1.08 LMT of wheat vis-a-vis 2.61 LMT by the state agencies. In Gujarat, the share of state agencies and private traders is equal at 1.8 LMT,” said Siraj Hussain, chairman and managing director, Food Corporation of India (FCI).

On the other hand, private traders have procured just 7,300 quintal wheat in Punjab (of total 61.61 LMT arrivals) and merely 1,061 quintal (of total 48.30 LMT arrivals) in Haryana.

Besides higher tax rates, higher freight charges are also keeping agri-corporates away from the mandis in Punjab and Haryana. The higher cost of wheat in Punjab and Haryana (almost Rs 150 per quintal over and above the MSP) has forced most of the companies like ITC, Adani, Cargill, Glencore and Australian Wheat Board to procure wheat from mandis of Uttar Pradesh, Rajasthan and Madhya Pradesh. Even the flour mill owners from Punjab and Haryana are buying wheat from these states.