States unwilling to fix taxes,commission on foodgrains at 3-4%

State governments have expressed their unwillingness to implement the Shanta Kumar-led FCI restructuring panel's recommendation to fix taxes and commission on foodgrains at 3-4%, a top Food Ministry official has said.

Presently, states charge very high statutory levies and commissions, which vary from 3.6% in Rajasthan to 14.5% in Punjab in case of wheat. In Gujarat and West Bengal, on the other hand, the same comes to less than 2%. High taxes are believed to have restricted private traders from buying grains in some states.

"The objective is desirable but it is not possible to implement right now. The states are also not willing to do. We need to see what can be done on the tax issue," Food Secretary Sudhir Kumar told PTI.

The Centre has already spoken to states on this issue and "we have to find other ways to address this issue," he said.

The eight-member panel -- which was set up in August 2014 under the chairmanship of BJP MP Shanta Kumar to recommend a complete overhaul of FCI -- suggested that FCI should restrict the payment of these levies and commissions to 3%, or a maximum 4%.

"In due course, this should be incorporated in the procurement price itself. This will bring back the private sector to market, and lessen the burden of excessive stocks on the government. States that lose revenue can be compensated for 3-5 years through a properly designed diversification package through a separate channel by government," the panel said in the report submitted last month.

The Food Secretary also said that it was not possible right now to implement the panel's key suggestion to bring down total coverage of beneficiaries to around 40% from 67% of the country's population under the National Food Security Act (NFSA).

"We are clear on NFSA, it is the act of Parliament and we are not going to change right now unless there is political will on this issue," he said, adding that the food law, rolled out in 2013, has not been implemented fully.

So far, the law has been rolled out in 11 states. The ambitious legislation aims to give legal right over highly subsidised foodgrains at Rs 1-3 per kg per person per month.

The Food Corporation of India (FCI)  is the government nodal agency for procurement and distribution of foodgrains.