Ranchi, July 30: Farmers of the state will feel the pinch, as the state government has decided to increase the mandi tax from one to two per cent.

Agriculture minister Nalin Soren said the hike is essential as the Centre wants the state to levy tax at one point only, unlike the present multi-point tax structure. The cumulative collection of taxes from the mandis is about Rs 20cr.

It is mandatory for farmers to sell vegetables, edible oil seeds, cereals and pulses through mandis for which they have to pay one per cent tax.

Ironically, the state agriculture marketing board, the apex body of the 28 mandis (bazaar samitis), has nearly Rs 100cr in its kitty through taxes.

“The board is supposed to use the money for developing village roads, sink tube wells and such things. But after creation of the state, it has undertaken no work and the amount lies unutilised,” said an agriculture department official.

Soren confessed that a large amount of money received by the board remains unspent. “But we are drawing up plans to improve things in villages. Projects worth Rs 9cr are being prepared to improve the infrastructure of the villages near the mandis,” he said.

Saying the hike would be detrimental, a board official said: “Farmers would sell products directly in open market instead of through mandis, which the board would be unable to stop due to manpower crunch.”