Govt does away with import duty on wheat; farmers protest

Vibha Sharma

Tribune News Service

New Delhi, December 8

The central government on Thursday scrapped its 10 per cent import duty on wheat — a move that raises doubts about the Agriculture Ministry's production estimates of the grain for the year while evoking strong reactions from farmer groups and opposition parties. 

The notification tabled by the Finance Ministry in the Parliament said the cut would be made effective immediately, with no end date. Significantly, the move follows reports of local wheat prices hitting a record high last month. Apprehensions stemmed from production in the past two years falling well below the peak of 2014 and stocks almost at the lowest of past few years — factors that could push up domestic prices of the grain further.

Farmer groups claim that doing away with import duty was not only counterproductive to interests of farmers in India but also reeked of ulterior motives — like catering to the interests of international commodity traders.

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Ajay Jakhar of farmers’ forum Bharat Krishak Samaj called the move "absolutely wrong" and the one  "giving very wrong signal about the situation of the food grain in the country". 

“The decision is absolutely wrong. The government has proudly declared time and again that sowing is more than last year in spite of demonetisation. There is also no apprehension of lower yield too. Farmers will suffer, specifically in wheat growing states of Punjab and Haryana, and international commodity firms will make a killing.”

“We urge the government to do a rethink on the issue and not be influenced by international commodity firms and grain exporting nations. Imports are counterproductive to the Prime Minister’s 'Make in India campaign' and efforts to double the farming income," he said.
 
Agriculture expert Sudhir Panwar agreed the move would lift overseas purchases.

"However, producers of premium wheat will suffer more than those selling wheat at MSP rates.  Private operators will be able to buy international premium produce at cheaper rates,” he said.
 
Notably, according to reports, after the government in September lowered wheat import duty to 10 per cent from 25 per cent private importers purchased about 5,00,000 tonnes of wheat, mostly from Australia. The latest move too is expected to help private traders like Cargill, Louis Dreyfus and Glencore increase purchases, perhaps from the United State, which Jakhar said has seen a record production of corn and wheat this year. 

However, officials said the measure was aimed at circumventing any further rise in prices of the essential food grain.

“The government could not have afforded another controversy, especially after demonetisation. It wants to keep inflation under control ahead of elections in States like Uttar Pradesh and Punjab. There are also concerns about productivity and quality factors of the Rabi crops in view of IMD's forecast of warmer winter,” they say.

However, according to opposition parties, the notification reducing import duty to zero was a "double whammy for farmers deeply hit by demonetisation". Rajya Sabha MP of Congress Viplove Thakur said: "Farmers are already suffering from aftershocks of demonetisation. They have been complaining that demonetisation move hot them hard, making it difficult for them to buy seed and fertilisers and now this".

The government, the critics said, has been progressively reducing import duties on wheat, which would mean that the Agriculture Ministry’s production estimate of 93 million-94 million tonnes was a falsehood. The Agriculture Ministry pegged wheat output for 2016 at 93.50 million tonnes— up from 86.53 million tonnes a year ago.