Cotton cultivators in Punjab are selling their crop to Rajasthan and Haryana owing to high tax rates, a trend which may hit the state’s earnings and create shortage for the local ginning and spinning industry.
“Fifty per cent of our factories have shut down as they do not have cotton for ginning process. The spinning industry will also face a severe crunch of cotton for making yarn,” Punjab Cotton Factories and Ginner’s Association President Bhagwan Bansal said on Thursday.
“Cotton crop grown in Punjab is being sold in Haryana and Rajasthan by the farmers in this season because the taxation rate in Punjab is quite high,” he said.
With farmers getting Rs 150 to Rs 200 more on each quintal of cotton in adjoining Haryana and Rajasthan, almost 7,000 to 8,000 cotton bales per day from Punjab are being sold in these states, he said.
Punjab has about 350 ginning mills. Cotton production in Punjab is likely to remain around 21 lakh bales during this kharif marketing season compared to 23.55 lakh bales achieved in the last season because of 12 per cent decline in area under cultivation observed this season.
Farmers in Punjab have adopted several ways to sell their crop to markets in Haryana and Rajasthan via Sardulgarh to Sirsa, Rama to Kalianwali, Bathinda and Sangat to Dabwali and then from Abohar, Malout and Fazilka to Ganganagar.
Punjab charges 12.5 per cent as tax on the cotton crop which comprises four per cent VAT, two per cent each as Rural Development Fund (RDF), market fee and PIDF cess and 2.5 per cent arhatiya commission.
However, the tax on cotton in Haryana and Rajasthan is 10 per cent and 7.6 per cent respectively. Punjab earns close to Rs 90 crore as market fee and RDF from cotton while VAT earnings stand at Rs 80 to 90 crore.
