The total area under cultivation for pulses will go up significantly next year with the government announcing the minimum support price (MSP) for the commodity earlier this month.

This ‘bold’ decision will ensure that farmers get better prices and encourage them to produce more pulses, said Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance.

The MSP is around 10 per cent above the normal prices. Farmers are assured of good returns because the MSP means the open market prices are lower. The farmer will sell pulses to government or government agencies. This MSP will have its impact from next crop season, he said.

The Consumer Price Index increase of about 5 per cent is mainly due to the rising price of pulses in the last couple of months, thanks to a production shortage in India and abroad, he said while delivering the second G Ramachandran Memorial lecture on the State of the Indian Economy organised by the Southern India Chamber of Commerce and Industry and G Ramachandran Memorial Committee.

The domestic demand for pulses is about 22 million tonnes (mt). While the domestic production is 19 mt the balance 3 mt is imported, mainly from Myanmar. In the last one year, production in Myanmar declined significantly and India’s own production was down, leading to a demand and supply issue. The price of pulses increased nearly three times to touch a high of ₹150, he said.

Speaking about economic reforms, Das said they are a 24/7 exercise and the government will not wait for the Budget to announce them.

The FDI reforms could have been delayed till the Budget but since the policy decision was ready, it was announced at once, he observed.

The idea of the GST Bill is to unify India as one market and bring in a simple tax structure to ensure competitiveness of manufacturers, he further pointed out.

GST introduction

Experts say the introduction of GST will give a 1.5-2 per cent boost to GDP. It will come sooner or later, said Das. Both the Central and State governments are administratively prepared to introduce GST at the earliest.

The Bills are ready, the administrative manuals are ready and the IT backbone will start trials on January 1, 2016, he said.

Maybe for one or two years, there will be a revenue dip for manufacturing States as they get nearly ₹1,500 crore as Central sales tax. However, from the third or fourth year onwards, they will gain.

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