Tax rejig needed for Punjab, Haryana to switch crops

Written by Sandip Das | New Delhi | Updated: May 9 2013, 06:38am hrs
Move to shift area from paddy to less water-consuming crops

As a part of shifting a chunk of paddy area to less water-consuming produce such as maize under the crop diversification plan, Punjab and Haryana will have to rationalise the existing high tax structure for the marketing of agriculture commodities to attract private players.

Punjab, which is preparing a blueprint on crop diversification, is expected to propose lowering of the existing taxes from 14.5% to a reasonable level to involve the private sector in the marketing of crops such as maize and pulses.

In a bid to deal with stagnating yields and depleting water table in Punjab, Haryana and western Uttar Pradesh, finance minister P Chidambaram allocated R500 crore for the current year for the launching of a programme of crop diversification by encouraging farmers to shift from water-intensive paddy to alternative crops.

On alternative crop, Punjab is expected to submit a proposal for shifting about one lakh hectare of paddy area into maize and pulses during the forthcoming kharif season. For promoting marketing of maize and pulses so that farmers get remunerative prices, the Punjab government is expected to lower the existing tax rates so that private players are encouraged to buy produce from farmers.

At present, private players are virtually absent in the procurement of paddy because of high taxes; we need to encourage them to buy maize and pulses from farmers by offering lower taxes, Gurcharan Singh Kalkat, chairperson, Punjab State Farmers Commission, told FE.

Haryana, which has already submitted its crop diversification plan to the agriculture ministry, has proposed to shift 15,000 hectares of land from paddy to maize, 20,000 hectares to cotton and 5,000 hectares each to gaur and pulses.

An official with the agriculture department of Haryana said the state plans to take up around 2 lakh hectares of land under the crop diversification plan and the state would use the funds from the Centre for promoting agricultural marketing infrastructure and providing quality seeds.

We will disburse funds to Punjab, Haryana and Uttar Pradesh after studying the proposals submitted by the respective states, an agriculture ministry official said. Punjab and Haryana are expected to get R200 crore each in the current year for initiating crop diversification while UP will get R100 crore during 2013-14.

The agriculture ministry is expected to release 50% of the total grant under crop diversification plan immediately after the states plans are finalised.

Commission for Agricultural Costs and Prices (CACP) chairman Ashok Gulati said rice cultivation should immediately shift to eastern states like Orissa, Bihar and eastern UP, where more water is available. He had suggested that Punjab should reduce paddy acreage by one million hectare of the total area of close to 3 mh.

Punjab CM Parkash Singh Badal, in a meeting with agriculture minister Sharad Pawar prior to the Union Budget presentation, had demanded R5,000 crore for introducing the diversification programme.