Focus: GS-III Indian Economy
Four specific points – Gap between Policy and Impact on the rural economy
I- Diesel Tax, and others
- Under PM Kisan, each landowning farmer (landless are excluded) receives Rs 6,000 annually. A farmer growing a combination of paddy and wheat utilises about 50 litres of diesel per acre.
- As of September 2020, each litre of diesel gets taxed at about Rs 45.
- Additionally, farmers are paying GST on purchase of inputs like seeds, pesticides, fertilisers, tractors and implements and such others for which, unlike industry, they cannot claim input credit.
II- LPG Cost
- Even though oil prices have reduced from $60/barrel to $40 after the Covid pandemic, the price of a subsidised gas cylinder to the underprivileged in the villages under the Ujwala scheme went up.
- Earlier in 2020 amid the COVID clampdown, the MSP for paddy was increased by 2.9 per cent.
- But even the food inflation in cereals for 2019 was 8.4 per cent.
- It means, in real terms, the MSP for paddy will decrease by the time of marketing in October.
IV- Policies from other ministries
- One can find policies continuing during COVID times emanating in ministries other than agriculture which impact the food value chain and are counterproductive and conflicting.
- For example, 75 per cent of the dal consumed in India is channa and arhar. While both are selling below MSP, import duties on masoor dal were reduced by two-thirds to 10 per cent because there was a demand for it in one part of India.
-Source: Indian Express