In yet another instance of the Centre’s policy flip-flop with regard to farm imports, it imposed 10% import duty on wheat and tur dal on Tuesday, with the ostensible objective of ensuring higher price realisation by farmers amid expectations of bumper crops. Last December, the government had allowed duty-free imports of wheat to increase domestic supplies and curb prices, while it had in September slashed the duty on the grain from 25% to 10%. The removal of the import tariff was despite the agriculture ministry expecting record-high domestic wheat production in 2016-17 (July-June) and pitching for the continuance of the duty.
The estimated revenue implication of the latest decision to impose duties is about R840 crore at the current levels of imports, minister of state for finance Arjun Ram Meghwal said while announcing the decision in Lok Sabha. While new wheat crop arrivals have just started, the government’s procurement will start from April. Last week, food and consumer affairs minister Ram Vilas Paswan had said that the government was in favour of re-imposing import duty on wheat to protect farmers’ interests. Traders have estimated wheat imports so far this financial year at around 5 million tonne, while official sources say the imports in the year would be around 5.5 million tonne.
Wholesale wheat prices have surged to a multi-year high of R21/kg in October-November 2016, but has since fallen to the current level of R18.5. In many key tur producing regions, the lentil’s prices had crashed below the minimum support price of R50.5/kg in the last season, forcing the government to step up procurement. The import duty, sources said, is expected to incentivise farmers to produce the pulse variety. The government had imported 4.01 lakh tonnes of tur dal till January this year. Apart from this, close to 6 lakh tonnes of tur were imported by private players.
According to a senior government official, there has been no imports of the pulse since January on forecasts of a bumper crop. As per the agriculture ministry’s second advance estimates, India’s wheat production in 2016-17 (July-June) is likely to be a record 96.6 million tonne against 92.3 million tonne produced a year ago. The previous record was 95.6 million tonnes in 2013-14. Domestic tur dal production is estimated at 4.2 million tonne 2016-17, up from 2.6 million tonne a year ago.