Punjab: State to lose Rs 3K crore as Centre cuts grain procurement charges

Punjab stands to lose over Rs 3,000 crore per annum as the Centre has directed the state government to restrict the statutory charges imposed on foodgrain procurement to just 2 per cent of the minimum support price (MSP). The administrative charges for food procurement have also been reduced from 2.5 per cent to 1 per cent.

Union Minister for Consumer Affairs, Food and Public Distribution Piyush Goyal in a letter has asked Chief Minister Bhagwant Mann to direct officers “… to restrict the statutory charges up to 2 per cent of the MSP, since the foodgrain is procured for distribution among the poor and vulnerable sections of society under the NFSA and other welfare schemes. This rationalisation will not only reduce the subsidy burden on the exchequer, but also encourage private players to procure foodgrain from the state, which will ultimately benefit farmers.”

This means that the state government will have to stop charging the 3 per cent Rural Development Fund and 3 per cent of market fee and instead charge 2 per cent as statutory charges. With this, the nearly Rs 3,960 crore collected as taxes on procurement of wheat and paddy earlier, will now be reduced to Rs 1,320 crore. The reduction will lead to a loss of another Rs 550 crore, putting a massive strain on the fiscal health of the state procurement agencies.

The letter, a copy of which is with The Tribune, also states that the Centre is considering the release of previous dues of the RDF in consultation with other stakeholders. The RDF dues of Rs 2,880 crore are still pending with the Government of India for the past three procurement seasons.

This article has been republished from The Tribune.