The Telegraph
Since 1st March, 1999
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Punjab row over wheat price

Chandigarh, Dec. 24: Cash-strapped Punjab is heading towards a confrontation with the Centre for demanding Rs 790 a quintal as the minimum support price for wheat.

According to state agriculture department sources, Rs 790 a quintal was sought after drought in the state earlier this year and the rollback of free power to farmers.

“The Centre has not yet announced the MSP for wheat. It has also not taken any decision on our demand for Rs 4,367 crore as drought relief,” an officer said. “Our farmers have suffered because of the drought and we want them to be compensated.”

The drought in Punjab has set back its agriculture sector by Rs 1,260 crore of production loss for the main kharif crops, including Rs 882.56 crore for paddy.

Also included are loss of Rs 462.65 crore on area remaining unsown and Rs 412 crore additional expenditure incurred on diesel, as also Rs 193 crore spent on making tubewells deeper.

Farmers have demanded Rs 15,000 an acre as drought relief and various other concessions after the government indirectly imposed taxes worth Rs 600 crore on them. This includes sales tax on fertilisers, pesticides, insecticides, milk and fodder.

According to sources, like last year, the Commission for Agricultural Cost and Prices has recommended a slash and not a hike in the support price for this year. The commission has iterated that hiking support prices every year — that, too, beyond the levels it recommended — had led to Indian wheat being outpriced in the world market.

This was particularly so during the 1990s when the minimum support price went up from Rs 225 a quintal in 1990-91 to Rs 580 a quintal in 1999-2000. In contrast, between 1980-81 and 1989-90, prices went up from Rs 130 a quintal to Rs 215 a quintal.

Last year, Punjab had demanded Rs 770 a quintal MSP for wheat. But the Centre accepted only a token increase of Rs 10 and declared Rs 620 as the minimum support price.

This year, however, Punjab, armed with a report from the Punjab Agriculture University for a substantial hike in the support price, is expected to explain its stand strongly.

Punjab is also pushing the Centre to determine new norms for declaring a state drought-hit. According to chief minister Amarinder Singh, under existing norms, Punjab cannot be declared drought-hit because its crop loss was below 50 per cent. The loss must be half the output to declare an area drought-affected.

Punjab, in the throes of a financial crisis, had last April sought a cash credit limit of Rs 6,200 crore from the RBI for wheat procurement. The wheat procurement season normally begins from April 1.

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