Whether Finance Minister Pradeep Amat, in this year’s Budget, will tax the farmers or spare them is a million-dollar question even in the corridors of the Agriculture Department. Though the Government doles out a lot in the name of much-hyped input subsidy to the farmers, reality is it pinches them where it hurts. Top officials in the Agriculture and Cooperation departments feel the brouhaha over distress sale by farmers could die a natural death if the Finance Minster loosens the strings of his purse by way of slashing the high 15.5 per cent cess (exclusive of mandi labour charge and milling charges) it levied on the paddy sale at mandis.
In fact, this high cesspool is seemingly turning into a sort of debt whirlpool. Farmers in many districts, even in the current (2014-15) procurement season (ending next month) have gone for distress sale to have immediate liquidity. Not getting right price for their produces make them hard pressed to set off debts incurred on cultivation, and at times unresolved debt proves suicidal for them. Even, the Commission for Agricultural Cost and Prices (CACP) in its price policy report has outlined the high cess as the primary reason behind widespread distress sale of paddy in the State during the last (2013-14) procurement season.
“In 2013-14, the Odisha Government increased the total tax/cess levied on paddy and rice to 15.5 per cent of Minimum Support Price (MSP) from 8.5 per cent. This resulted in private sector getting crowded out due to increased procurement incidentals. Most of the stocks then were procured by the Government leading to marginalisation of farmers because of State’s poor procurement infrastructure,” added the report.
The report observed, even, FCI fearing high incidentals opted hands-off approach. It further noted that paddy rakes from the State was sent to Punjab/Haryana/Chhattisgarh and after milling, in many cases, the same paddy comes back as rice through the PDS at huge costs. CACP report recommend maximum such tax rate at below 5 per cent only because the MSP of Rs 1,310 then get inflated to Rs 1,513/qtl here, which also aggravated rice wholesale price in Odisha fuelling inflation without benefitting farmers.
According to assessment by State-level farmers’ association Odisha Krushak Mahasang, last procurement season (13-14) has seen the worst distress sale in the recent times. Farmer’s produces were left to the vagaries of nature due to poor mandi infrastructure in majority of districts. Private millers seemingly disappeared in many districts in western, southern and northern Odisha, it added.
A comparative study shows how the State farmers get indirectly taxed more than their counterparts elsewhere. In Maharashtra and Gujarat, the taxes/cess on paddy and rice were 3.5 per cent of MSP only. In Jharkhand and Bihar, it was 3-6 per cent. West Bengal has 3 per cent. Even, Chhattisgarh with 9.7 per cent rate is lower than Odisha.
For this, CACP in its recent ranking of States based on paddy market distortions put Odisha in the ‘RED’ category. Odisha was assigned the 16th rank among the total of 18 States. Though the State has raised the tax rates to mop up revenue for rural development and infrastructure development, the CACP feels the high taxes/cess on the other hand distorts the market affecting farmers. The State gains some revenue, of course, at farmers’ expense, it added.