Gujarat impact? Govt raises import duty on two varieties of pulses by 30%

BJP won recent state elections with a smaller majority and the displeasure was due to distress in farm sector; floor support price increased for rapeseed

The central government raised the import duty on two varieties of pulses, chana (chickpea) and masoor (red gram) to 30 per cent. And, hiked the Minimum Support Price for toria, a variety of oilseed grown largely in Rajasthan, by around 9.5 per cent to Rs 3,900 a quintal.

It also indicated it might further increase the import duty on wheat; this was raised to 20 per cent only last month, after private traders imported about a million tonnes of wheat since April at 10 per cent duty.

These moves come in the wake of the election in Gujarat, where the ruling party was returned to power with a smaller majority, due to a problem with rural voters. The latter and critics said the displeasure was due to distress in the farm sector and sharp falls in prices of produce.

"Production of chana and masoor are expected to be high during the coming rabi season and cheap import, if allowed unabated, are likely to adversely affect the interest of farmers," was the official explanation for Thursday's announcements.

Chana, masoor and wheat are all major rabi crops, sowing of which is on in the northern parts. Production of all three is expected to be good this year. Importantly, all three are grown majorly in Madhya Pradesh and Rajasthan, both of which go to polls in the next few months and having seen a series of farmer agitations in recent times.

Till a week earlier, chana had been sown on 9.62 million hectares, almost 14 per cent more than the area covered during the same period last year. Masoor was around 1.55 mn ha, around 1.2 per cent more. The area under wheat was 24.55 mn ha, close to two per cent less than the area covered during the same period last year.

Both chana and masoor prices are below their 2017-18 MSP of Rs 4,400 a qtl and Rs 4,250 a qtl, respectively. Chana is selling at Rs 4,000-4,200 and masoor at Rs 3,500 a quintal. Chana is India's largest grown pulse variety, with annual production of eight to 10 million tonnes.

Some months earlier, the government had imposed a 10 per cent import duty on tur (pigeon pea) and a cap of 200,000 tonnes annually on its import. Later, it imposed an annual cap of 300,000 tonnes on import of urad (black gram) and moong (green gram), to push up domestic prices which had crashed because of a bumper harvest. It also imposed an import duty of 50 per cent on yellow peas, among the highest in several years.

"Though the government had imposed an import duty on tur, it continues the trade agreements with Myanmar and African nations, both major sellers. Therefore, the duty is not effective enough," Pradeep Ghorpade, chief executive of the Indian Pulses and Grains Association, told Business Standard.

Sources said the government had an agreement with Mozambique for annual purchase of 125,000 tonnes of tur, signed at the height of a pulses shortage last year. This year, around 80,000 tonnes have been imported.

"The impact of this (new) duty on chana or masur prices can't be judged right away and the markets should take some time to react," Ghorpade said.