The agriculture sector, which till recently was growing at just 1.91% in Punjab, was believed to be the major cause of slow GDP growth in the state. And now, there?s more to cheer for. If recent VAT collection in the state is any indication, agriculture has been proving to be the engine of growth and one of the only sectors unaffected by the slowdown.
In the first six months of 2008-09, Punjab has recorded a 38.9% increase in VAT collections, placing Punjab in the third position in the country, as far as growth under VAT is concerned, a remarkable jump from its twenty fourth position in 2006.
During the current fiscal, the contribution of agriculture to Punjab?s gross revenue would be about Rs 4,300 crore, the largest contribution by a single sector to the state?s gross revenue. The current paddy season also marks Rs 600 crore as its contribution to VAT collections. By the end of November, paddy worth Rs 15,000 crore will be sold in grain markets in the state, on which, VAT at 4% is due to be collected.
Punjab chief minister, Parkash Singh Badal told FE that in the first six months of 2008-09, VAT collection had gone up to Rs 3330.82 crore, Rs 933.65 crore more than the collections during the same period last year. Badal also informed that VAT collection in 2006-07 was Rs 4778.69 crore, of which, agriculture alone accounted for Rs 592 crore.
Badal added the, ?Centre should be more liberal and should bail out farmers who had suffered all these years because of high cost of inputs. It was unfortunate that agriculture was a state subject, yet the Centre controlled the cost of inputs and the mechanism to fix the minimum support price. If the Cente brings down the cost of inputs and bails out farmers from debts, the agriculture sector would boom?.
He also said, ?Central assistance is required to write off non-institutional debts of the farmers, as Punjab has lost its precious nutrients and groundwater while meeting the nation?s demands of food security and bringing out the Green Revolution?. Punjab can again be the foremost state in the country in economic growth, in per capita income and in overall prosperity as had been proved by the increase in VAT collection, but only if the Centre lends a helping hand, observed Badal.
In the current fiscal, about Rs 300 crore will be collected as market fee on paddy and an equal amount, as rural development fund. Besides, Rs 150 crore will be collected as infrastructure cess. Market fee, rural development fund and cess are collected at 2%, 2% and 1% respectively, on the sale of paddy and wheat.