Punjab’s coffers will swell by a whopping Rs 2,800 crore, a growth of 40 per cent from last year, owing to a good crop. The government collects 2 per cent market fee, 2 per cent rural development fund (RDF), 4 per cent purchase tax (VAT) and 3 per cent infrastructure cess (hiked from 2 to 3 per cent this September) from crops. The good minimum support price (MSP) of wheat, paddy and cotton and bumper wheat and paddy crops have not only brought higher revenues, but also reinforced agriculture as the main driver of Punjab’s economy. In fact, while other states are struggling with depleting value-added tax (VAT) collections, the revenue from crops has resulted in Punjab’s VAT collections going up by over 40 per cent against the corresponding period last year, catapulting it to the third position as far as growth in VAT is concerned. A total of Rs 550 crore is likely to accrue as market fee collected by the market committees and the state will gross an equal amount as rural development fund, which is under the Chief Minister. Purchase tax collected on crops will add another over Rs 1,100 crore to the VAT kitty while Rs 500 to 600 crore will make its way to the Punjab Infrastructure Development Board (PIDB) as infrastructure cess. However, despite a good MSP, the market fee from cotton has declined this year from Rs 109.7 crore to Rs 80.47 crore, owing to lesser area under cotton this year. But it has been more than offset by the 105 lakh metric tonnes of wheat arrivals this financial year against last year’s 80.16 lakh metric tonnes and over 150 lakh metric tonnes of paddy arrivals against last year’s 141 lakh metric tonnes. Interestingly, the high production of basmati varieties, more than double than last year, has not only brought huge benefits to the Punjab farmers as its prices are touching Rs 3,500 to Rs 3,600 this year, a jump of 50 per cent over last year, but also brought higher revenues for the cash-strapped state. “It is not just Punjab that has benefited from the good crop year, but the Centre’s granaries are also overflowing. Punjab’s high contribution to the Central pool and buffer stocks will help the country not only feed its millions, but also save on the foreign reserves that go into importing foodgrains,” Punjab agriculture department director B.S. Sidhu says. Most importantly, the good returns will help bring agriculture back on the agenda of government’s think-tank on boosting Punjab’s frail economy, feel agriculturists.
