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The Commission for Agricultural Costs and Prices (CACP) has asked the Government to limit procurement of wheat in major producing States such as Punjab, Haryana and Madhya Pradesh that impose high statutory levies in excess of five per cent.
The high levies imposed by Punjab and Haryana have driven away the private sector buyers from these States as taxes have made wheat expensive.
As a result, the Government is being forced to buy the entire food grains in these States at high cost resulting in an inflated food subsidy bill.
“It may be noted that the Government has decided to limit the procurement from states which announce state specific bonus. The Commission recommends a similar dispensation be put in place in case of states levying statutory taxes in excess of 5 per cent,” CACP said in its latest price policy report for the Rabi 2015-16.
In Punjab, the market levies imposed by the State as a percentage of the minimum support price (MSP) was 14.5 per cent for the 2014-15 fiscal, while in Haryana was 11.58 per cent.
As a result, the market price of wheat worked out to ₹1,603 a quintal in Punjab and ₹1,562 in Haryana, whereas the MSP announced by the Government for 2014-15 was ₹1,400.
Similarly, the levies in Madhya Pradesh stood at 7.02 per cent
. The levies mainly consist of market fee, development cess and the agents’ commission. The revenues from such taxes accrue to the State Governments, which see it as an incentive to keep such levies high.
Punjab, Haryana and MP accounted for about 87 per cent of the 28 million tonnes procured by the Government, while Uttar Pradesh – the largest producer accounted for a mere 6 per cent.
CACP also called for strengthening procurement machinery in major producing States.
On Wednesday, the Government approved a hike of ₹50 in MSP at ₹1,450 for the 2015-16 marketing season.
The Central pool wheat stocks stood at 32.85 million tonnes as on October 1, almost twice that of buffer and strategic reserves.
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