Raje

Jaipur, Feb. 25: The Vasundhara Raje government today clamped a four per cent tax on sale of fruits and vegetables by organised retailers in a move seen as a sop to dispirited small-time vendors in an election year.

The move, announced as part of the state budget, will increase the prices of fruits and vegetables in retail stores such as Reliance Fresh, Spencer’s, Big Bazaar and True Mart which have mushroomed across the state much to the chagrin of vendors who say business has dipped.

Unwilling to upset the farm-products trading community months before the Assembly polls, the government imposed the tax, which will be levied over and above VAT. It was one of a slew of measures announced by the chief minister who presented the budget and is eager to keep the small trader, a key vote-bank of the BJP, happy.

Organised retail has been under attack in many states, with Reliance bearing the brunt. The company directly purchases vegetables from farmers at prices higher than those offered by vendors and sells at the vendors’ price or even less.

In Bengal, the Left Front is divided over the entry of big retail in the farm products market. While Spencer’s and a few others have opened stores, they have not been permitted to source their stock directly from the farmers. They have to go through government agencies.

Rajasthan agriculture minister Prabhu Lal Saini justified the tax. “It is aimed at giving relief to small-time vendors and customers and should not be linked to any electoral move.

“These vendors will be able to stand up to competition from big retailers. The big retailers should not have any problem paying four per cent tax on items sold as they already have a dedicated customer base.”

The Opposition Congress dismissed the tax as an electoral stunt. Raghuveer Sharma, vice-president of the party’s Rajasthan unit, said: “The BJP government first allowed the retailers to come and break the backbone of small-time vendors. Now they are doing a turnaround, saying the four per cent tax on retailers will bring relief to the vendors. The retailers won’t pay the tax; ultimately the customers will be the losers.”

The small vendors don’t think the tax will serve any purpose. Ishwar Chand, who owns a vegetable store in Kishanpole, said the levy would not affect the big retailers. “A four per cent increase in prices doesn’t mean much. Who will come to us leaving the plush, air-conditioned stores? Customers think vegetables at these stores are hand-picked, clean and really farm fresh.”

Bhanu Arora, who looks after corporate communications for Reliance Retail in Rajasthan, said the company had 29 outlets in the state — 26 of them in Jaipur — and more were in the pipeline. But the company refused to comment on the tax. The retail industry said the levy was “divisive”.

Kishore Biyani, managing director of Pantaloon Retail (India) Limited, said: “I have not yet read the fine print (of the Rajasthan budget proposals), but on the face of it, it is a very discriminatory policy, very divisive. Why is a distinction being made between us? I have just one store in Rajasthan.”