States asked to do away with Sales Tax/VAT on imported sugar

The Centre on Wednesday declared that the production of rice might decline by 10 million tonnes this kharif owing to shortfall of 5.7 million hectares in paddy sowing from the deficient southwest monsoon. Some shortfall is also expected in the output of oilseeds and sugarcane because of a decline in acreage.

Announcing this at the Conference of State Food and Civil Supplies Ministers here, Union Food and Agriculture Minister Sharad Pawar said the cumulative seasonal rainfall for the country this year has been about 29 per cent below the long period average.

This is the first time the government has come out with the quantum of shortfall in kharif due to deficient monsoon.

“Due to expected reduced production of rice, there could be pressure on the availability and market price of rice,” Mr. Pawar warned. Already prices of pulses, sugar and vegetables had shown a sharp increase, he admitted.

He said amongst the various measures to minimise the impact on poor sections, the government was considering increasing the percentage of levy sugar in the Public Distribution System. Under a “more liberal regime for imports of essential commodities”, it had allowed zero-duty import of pulses, crude, edible oil and sugar.

Also, the States have been advised to do away with Sales Tax/VAT on imported sugar in the interest of consumers. Sugar output this year has declined to about 150 lakh tonnes as against 263 lakh tonnes last year, against the domestic requirement of 225 to 230 lakh tonnes.

While most States were demanding higher allocation of subsidised foodgrains for drought relief, the government was willing to intervene in the market through its Open Market Sale Scheme, fixing the rate of grains at the minimum support price plus freight. The food subsidy bill for 2009-10 was estimated at over Rs. 60,000 crore.

Seeking the “full involvement” of the State governments to minimise the impact of drought, particularly on the weaker sections of the society, Mr. Pawar asked them to use the OMSS tool to cool down inflationary trends in food economy. He bemoaned that while States were demanding higher allocation of foodgrains as drought relief, most had conveyed that they did not need grains under the OMSS.

Referring to the “high level of diversion and leakage of subsidised foodgrains in various states”, the Minister said it was a “matter of great concern” that subsidised foodgrains were not reaching the targeted populations. “States must ensure transparency in the functioning of fair price shops and eliminate bogus ration cards.”

Mr. Pawar asked the States to crack the whip on hoarders and black-marketers to ensure availability of essential commodities in the market.

He also asked the States to begin the process of proper identification of the number of Below Povertyline families that should be covered for subsidised foodgrains under the proposed National Food Security Act.

Keywords: Pawardroughtkharifshortfall

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