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Amid row over farm laws, Centre tells Punjab it won’t pay RDF in paddy season

In the Cash Credit Limit extended to the state by Centre for paddy procurement, the RD fee component is not accounted for in the provisional cost sheet for procurement of paddy. This means that Punjab cannot withdraw RDF from the CCL it has received.

Written by Kanchan Vasdev | Chandigarh |
October 27, 2020 10:47:34 pm
Rural Development Fund, RD fee, farm laws, paddy season, Chandigarh news, Punjab news, Indian express newsThe Centre has also sought to scrutinise how the state government spends the RDF. (Representational)

A few days after President Ram Nath Kovind’s assent to Centre’s farm laws, the Rural Development Fund (RDF) appears to have become a casualty with Centre not keeping a provision for the RDF in the Cash Credit Limit extended for the current paddy procurement season. The Centre has also sought to scrutinise how the state government spends the RDF.

In the Cash Credit Limit extended to the state by Centre for paddy procurement, the RD fee component is not accounted for in the provisional cost sheet for procurement of paddy. This means that Punjab cannot withdraw RDF from the CCL it has received.

If the state does not get RDF on paddy, it would cost the exchequer about Rs 1,100 crore in paddy season alone.

The farm laws do not provide for RDF and market fee for the states. As per the new agri laws, the states cannot charge any RDF and mandi fee from the buyers.

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Punjab makes about Rs 3,500 crore annually on account of RDF and Mandi fee, at the rate of 3 per cent each of MSP, both charged from the buyers (in this case the Centre, as the foodgrains go to Central pool).

Communication from Centre

In a letter (dated October 23) to Secretary, Food and Civil Supplies, Punjab, the Union Ministry of Consumer Affairs, Food and Distribution has stated that “matters related to deductions from MSP made by state and utilisation of RD fee for the purpose of development of procurement centres are under scrutiny.”

In the provisional cost sheet attached along with the letter, no monetary provision is indicated towards the RDF. The column mentioning about the RDF has been kept blank with a footnote that the RDF is now under scrutiny.

The provisional rates of custom milled rice procured and delivered to central pool during the Kharif Marketing Season (KMS) 2020-21, include MSP of raw rice and par boiled rice between Rs 1,868 to 1,888, market fee between Rs 56.04 to Rs 56.64 at 3 per cent of MSP, arhtiya charges between Rs 45.38 to Rs 45.88, besides other charges. Every one quintal of packed rice would cost the Centre between Rs 3,269.13 to Rs 3,241.95. The other costs include mandi charges, handling charges, driage, milling charges, gunny bags price.

This is dictatorship: Punjab minister

Punjab Food Minister Bharat Bhushan Ashu told The Indian Express that they have received two separate communications from Centre. “They have asked us to provide them the details about how we spend the RDF. So, our RDF account is under scrutiny. And they have sent us a provisional cost sheet for paddy procurement according to which they will not be paying us any RDF. This is the height. Look at what all they are doing to Punjab. It is hitting back at us because our farmers are protesting.”

He added that the government was preparing a detailed reply to the Centre’s communication.

“We will be telling them what all we do with RDF. What do they want? Punjab will give its precious resources for the entire country, grow crops, spend money on procurement centres and road network and not charge the Centre anything? This is dictatorship. We will not get cowed down,” he said.

He added that the Centre was also running away from paying the commission to arhtiyas. “We pay them a commission of 2.5 per cent and they have now fixed a ceiling of Rs 46 per quintal. This is what they wanted to do with the farm laws. Where will the commission agents go? They had done this during wheat season also and we had taken it up with them. But again the provisional cost sheet says the same thing.”

Double blow

If the state does not get RDF this time then it would be a double blow for the funds crunched state that has not been getting its GST compensation also. Doing away with RDF and mandi fee in the farm law is a major controversial point with Punjab. The state government has been opposing it tooth and nail as the state has about 1800 mandis across the state and a network of long roads to make sure that each farmer does not have to travel more than 20 km to reach a mandi. The RDF and mandi fee is spent on the maintenance of 70,000 km-rural link roads and other infrastructure besides other projects.

The state earns about Rs 3,500 crores annually in the form of market fee and rural development fund (RDF) for providing its mandis for selling wheat, paddy, Basmati and cotton crops. In the Kharif and Rabi season 2019-20, the government earned Rs 3,642 crore.

Not first row over RDF

This is not the first attempt by Centre to seek details about RDF. Earlier, during former Chief Minister Parkash Singh Badal’s regime, former Union Finance Minister late Arun Jaitley had also asked the state to route the RDF through the consolidated fund so that the Centre knows where the state was spending the money. It had blown into a major controversy following which the Centre had to relent.

Punjab is already up in arms against the Centre for not restoring the goods train traffic.

PPCC chief Sunil Jakhar on Tuesday tweeted: “First was refusal to release Punjab’s GST dues, now it’s stopping of trains to Punjab. Two phrases come to mind which are used in international standoffs but definitely not used within a nation’s federal structure — 1. Economic sanctions 2. Blockade. What next ?”

In another tweet, he said, “To teach Punjabis a lesson for opposing #FarmLaws , some wise guy in Delhi may next suggest to ban having “Makki ki roti and sarson ka saag” in India. Large country like India needs to be governed with an equally large heart!”

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