The Hindu Business Line : Cash withdrawal levy may hit farm sector

OVERALL the Budget has nothing much in favour of spice industry in particular, despite the fact that it is passing through a crucial time as farmers and the domestic traders have grievances against the liberalised policy of free fall import from neighbouring countries as well as for export oriented units and pending advance licences as far as pepper economy is concerned.

As far as spices are concerned there is not much direct impact except that the import duty on cloves being reduced from 70 per cent to 35 per cent, reflecting the ability of the clove lobby to influence the Union Finance Minister.

General thrust has been, however, given to agriculture at large and also infrastructural developments with the recommendations of the various taskforce.

The security trading in the recognised exchanges has been recognised as a normal business activity, while commodity trading through recognised exchanges appears to have escaped the attention of Mr P. Chidambaram. Probably because, the Agriculture Minister has kept the commodity portfolio with him, not allowing the Securities and Exchange Board of India to intervene or take over the control.

The 0.1 per cent to be levied on all cash withdrawals above 10,000 is totally impractical for the agricultural sector, which has to provide cash to the farmers who are still in the unorganised sector and need cash to part with their produce. Therefore, it is expected that such a levy needs to be withdrawn since it may not have much impact in unearthing or taxing black money circulation.

The rural agricultural sector is still not geared up for all banking transactions. Therefore, the spices trade feels this may be an overburden even for the genuine traders and must be withdrawn. The growing commodity trading through the recognised exchanges needs more attention as a regular business activity since it has the potential to grow.

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