Bringing relief to thousands of agricultural traders, the Madhya Pradesh government has announced a reduction in mandi tax from the earlier 1.70 per cent to 0.5 per cent.
The move has brought to an end the 13-day state-wide strike called by the traders, who felt the tax was unreasonable and would have spelt the end of the mandis following the passing of the new farm laws by the Centre.
According to Gopaldas Agarwal, president of Sakal Anaj Dalhan Tilhan Vyapari Mahasangh Samiti, a state-level association of traders, the new laws allowed private mandis to operate without a licence or paying any taxes. However, the traders registered with the state government were still made to pay a tax of 1.70 per cent, making procurement more expensive and their entering the mandis redundant.
“Why will a trader come to the mandi if he has to pay huge taxes while the same produce is available outside without any tax or licence? Moreover, the money that the traders have invested in the mandi setup over the years would have gone down the drain and crippled their existence,” said Agarwal.
In the first week of September, the traders went on a four-day strike and gave the state government an ultimatum to reduce the mandi fees. As their demands were not heard, the traders had from September 24 refused to enter mandis and buy produce.
However, the decision to reduce the mandi tax is likely to affect the state treasury, already hit by the pandemic. According to a senior official from the State Agricultural Marketing (Mandi) Board, the reduction in tax is likely to affect revenues to the tune of Rs 1,000 crore.
According to the official, the state on average earns a yearly revenue of Rs 1,500 crore through taxes collected from mandis. This revenue, the official said, is spent for the upliftment of farmers in the state. The official said on average, about Rs 500 crore per year was spent in the Kisan Sadak Nidhi Yojna for the development of road infrastructure to remote villages, Rs 120 crore was given towards pension for the elderly and widows, while Rs 120 crore was used for maintenance of agriculture institutes.
“All these works are likely to take a hit with the reduction in taxes. The payment of mandi employees, who are eligible for higher pay under seventh pay commission, will also be a burden for the government,” the official said.
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