Amid raging farmers’ protest on the outskirts of Delhi over the farm laws, the Modi Government on Monday proposed an Agriculture Infrastructure and Development Cess (AIDC) on certain items to boost agriculture infrastructure and also announced that 1,000 more agriculture product marketing committees (APMCs) or mandis will be linked to e-national agriculture market (e-NAM) and commitment on the minimum support price (MSP).
By this, Finance Minister Nirmala Sitharaman has tried to send a message to the agitating farmers groups that the Government has no intention of dismantling an established APMC system and MSP and will further be strengthened in the country.
The item coming under cess ambit are petrol, diesel, gold, alcoholic beverages, apples, Bengal Gram, and some imported agricultural goods.
As per the Budget document, the agriculture cess of Rs 2.5 per litre has been imposed on petrol and Rs 4 per litre on diesel and 100 per cent on alcoholic beverages. The AIDC is a new cess introduced by the Government in the Union Budget 2021-22 which was presented in Parliament on Monday, which seeks to shore up resources for improvement in agriculture infrastructure in the country. The Government expects Rs 30,000 crore through agri infra cess.
However, prices for petrol and diesel won’t change because or reduction in other duties. Consequently, unbranded petrol and diesel will attract basic excise duty of Rs 1.4, and Rs 1.8 per litre respectively. Proposing the introduction of an agri infra development cess while presenting the Union Budget 2021-22, Sitharaman said it would not affect the consumers of most of these goods.
The cess will be applicable with effect from February 2. Later addressing a press conference, Sitharaman said a component to develop farm infrastructure has been added to the cost of petrol and diesel. “Consequent to imposition of Agriculture Infrastructure and Development Cess (AIDC) on petrol and diesel, basic excise duty and special additional excise duty rates have been reduced on them so that overall consumer does not bear any additional burden,” Sitharaman said.
The FM announced nine measures for the agriculture sector including making available the Agriculture Infrastructure Fund to APMCs for augmenting their infrastructure facilities, increasing the agriculture credit target from Rs 15 lakh crore in 2020-21 to Rs 16.5 lakh crore in 2021-22 and extension of the Swamitva scheme to all states and Union territories.
During her third Budget speech, which lasted around one hour and 50 minutes, Sitharaman said the Government is committed to the welfare of farmers and the Minimum Support Price (MSP) regime has undergone a change.
The statement of Finance Minister is significant at a time when a large number of farmers are protesting for a legal guarantee to minimum support (MSP) price fearing that the Government will end the MSP system after implementation of the three farm laws aimed at freeing up the agriculture markets. The reforms are being seen as steps to support the agriculture sector and were introduced amid constant disruption from opposition parties. The Opposition as well as farmer leaders had been skeptical that the BJP-ruled states were trying to weaken APMCs by throwing agriculture markets open for private participants, triggering protests from farmers.
The Finance Minister reiterated the Government is ready for talks with the protesting farmers as discussion is the only way forward. “We can understand why farmers are sitting at the border. If any farmer has any question, Agriculture Minister (Narendra Singh Tomar) has never denied opportunities for talk,” Sitharaman said in reply to a query during her post Budget briefing. The Government is open for discussion. The Prime Minister before the commencement of Parliament session said the offer is still on the table,” she said.
In an attempt to address the concerns of farmers demanding the repeal of the three controversial farm reform laws, Sitharaman presented data on rising Government spending for purchasing grains and pulses at support prices, and promised to strengthen the State-regulated markets, or APMCs, further. The Budget promised to add 1,000 more regulated markets to the electronic national agriculture market, or e-NAM platform, where 17 million Indian farmers have already been registered. Besides, the Finance Minister said regulated wholesale markets, or APMCs, will be allowed to tap into the Rs 1 trillion agriculture infrastructure fund to upgrade and strengthen their facilities.
“In case of wheat, the total amount paid to farmers in 2013-2014 was Rs 33,874 crores. In 2019-2020 it was Rs 62,802 crores, and even better, in 2020-2021, this amount, paid to farmers, was Rs 75,060 crores. The number of wheat growing farmers that were benefitted increased in 2020-21 to 43.36 lakhs as compared to 35.57 lakhs in 2019-20. For paddy, the amount paid in 2013-14 was Rs 63,928 crores. In 2019-2020 this increased Rs 1,41,930 crores. Even better, in 2020-2021, this is further estimated to increase to Rs 172,752 crores. The number of farmers benefitted increased from 1.24 crores in 2019-20 to 1.54 crores in 2020-21,” Sitharaman said while citing data on government purchase at MSP. In pulses, Sitharaman said Rs 236 crore was paid to farmers in 2013-14. “In 2019-20, this was increased to Rs 8,285 crore. Now in 2020-21, it is at Rs 10,530 crore, more than 40 times increase from 2013-14.” Similarly, Rs 90 crore was paid in 2013-14 to cotton farmers while Rs 25,974 crore has been paid in 2020-21 as of January 27.
The Finance Minister’s announcements were focused to counter the criticism that the three reform laws passed by Parliament in September will weaken State-regulated mandis and lead to lower Government purchase at support prices. A robust e-NAM and better facilities in wholesale markets can help farmers realize better prices. Around 1.68 crores farmers are registered and Rs 1.14 lakh crores of trade value has been carried out through e-NAMs. APMCs will also to get access to Agriculture Infrastructure Fund.
However, beyond states such as Punjab, Haryana, Madhya Pradesh and Andhra Pradesh, most farmers still do not benefit from the assured purchases at support prices. The budget does little to address the most recurrent complaint of farmers that crop prices are non-remunerative while costs of farming are rising. The Budget also reiterated the Government’s ambitious goal to double farm income by 2022 (with 2015-16 as the base year), but did not disclose how it far it is from achieving the target.