A different interpretation of the definition of “agricultural produce” may mean that politics of rice may be revisiting the State.
The present row over rice has been triggered by the interpretation of the definition of “agricultural produce,” inserted in the Finance Act in 2012. Originally, rice was one among the goods exempted from the tax levy.
Now, it has been brought under the tax net. As per the amended law, agricultural produce refers to any produce on which no “further processing” is done or such processing is done by a cultivator or a producer without altering “essential characteristics” but making it only “marketable” for the primary market.
On the implication of the move, D. Thulasingam, president of the Federation of Tamil Nadu Rice Mill Owners and Wholesale Dealers’ Associations, says that as per a conservative estimate, the State’s annual requirement of rice is 80 lakh tonnes, of which one half comes from other States such as Andhra Pradesh, Karnataka and West Bengal. Under such circumstances, storage becomes inevitable.
Ever since the Congress lost power in Tamil Nadu 46 years ago, the issue of rice has generated intense political debates in the State.
In 1967, when the general elections were held to the Assembly in the context of the back-to-back nationwide drought of 1965 and 1966, the DMK's promise of supplying three measures of rice (approximately 4.5 kg) at one rupee was a huge hit, bringing the party to power for the first time.
Congress stalwarts K. Kamaraj and M. Bakthavatsalam had to bite the dust. It was another matter that the DMK government modified the promise and provided a measure of rice at Re.1 on an experimental basis in a few places. However, the scheme did not last long.
In 2006 the DMK promised, and delivered, to provide rice at Rs. 2 a kg. Some months before the 2009 Lok Sabha polls, the price was reduced to Re. 1.
Two years later, the provision of 20 kg rice free of cost was an important promise of the AIADMK during the Assembly polls. Chief Minister Jayalalithaa, on her first day in office, issued an order to this effect.
The scheme benefits around 1.8 crore card holders.
Those covered under the Antyodaya Anna Yojana (AAY) are getting 35 kg rice free a month. The annual food subsidy bill comes to about Rs. 5,000 crore, of which rice component is around Rs.3, 200 crore.