Variable tariffs on PDS imports soon
The next time foodgrain imports are imperative for the public distribution system (PDS), the cost of imports would be just 20% or 30% higher than the price farmers would receive for their produce within the country.
By Prabha Jagannathan, TNN |
NEW DELHI: The next time foodgrain imports are imperative for the public distribution system (PDS), the cost of imports would be just 20% or 30% higher than the price farmers would receive for their produce within the country.
That is because the food ministry has proposed a variable tariff regime for imports under the PDS, should such imports at all be imperative in a crisis situation.
“This is quite different from the tariff quota rate (TRQ) that was proposed for sugar imports on a more permanent level. What we’ve proposed for foodgrains is a variable tariff for PDS imports that is linked to what the farmer should get for his produce in the domestic market,” sources stressed. Tariff levels for rice are fixed at 80% now and for wheat, it is fixed at 50%.
The ministry’s proposal said tariff levels should be more realistically aligned with world prices, and fixed at a rate so that import costs for bolstering the PDS are not more than 10-20% higher than the economic cost of grain purchased in the northern and the eastern states.
Pointing to agri-imports to the tune of Rs 39,863 crore in ‘04-05 (11.2% of total imports) and imports of Rs 22,057 crore (4.6% of total), the ministry proposal has distinctly differentiated between imports by the private sector for the open market and imports for the PDS.
The proposal for a variable tariff itself has been posited within the larger recommendation that in case of grain shortfall in the PDS, imports should not be the first option. Instead, the price offered to the farmer for produce should be attractive but economical and linked to comparative import costs at different ports.
In the aftermath of the recent grain purchase fiasco faced by the government on wheat, grain purchase and transport major, the Food Corporation of India has begun maintaining a weekly tab on the landed cost of grain at different ports as compared to the domestic grain purchase costs.
Sources stressed two prices were more or less the same, but without taking into account key incidentals such as storage and transport for domestic grain, which is what actually balloons the food subsidy bill.
That is because the food ministry has proposed a variable tariff regime for imports under the PDS, should such imports at all be imperative in a crisis situation.
“This is quite different from the tariff quota rate (TRQ) that was proposed for sugar imports on a more permanent level. What we’ve proposed for foodgrains is a variable tariff for PDS imports that is linked to what the farmer should get for his produce in the domestic market,” sources stressed. Tariff levels for rice are fixed at 80% now and for wheat, it is fixed at 50%.
The ministry’s proposal said tariff levels should be more realistically aligned with world prices, and fixed at a rate so that import costs for bolstering the PDS are not more than 10-20% higher than the economic cost of grain purchased in the northern and the eastern states.
Pointing to agri-imports to the tune of Rs 39,863 crore in ‘04-05 (11.2% of total imports) and imports of Rs 22,057 crore (4.6% of total), the ministry proposal has distinctly differentiated between imports by the private sector for the open market and imports for the PDS.
The proposal for a variable tariff itself has been posited within the larger recommendation that in case of grain shortfall in the PDS, imports should not be the first option. Instead, the price offered to the farmer for produce should be attractive but economical and linked to comparative import costs at different ports.
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In the aftermath of the recent grain purchase fiasco faced by the government on wheat, grain purchase and transport major, the Food Corporation of India has begun maintaining a weekly tab on the landed cost of grain at different ports as compared to the domestic grain purchase costs.
Sources stressed two prices were more or less the same, but without taking into account key incidentals such as storage and transport for domestic grain, which is what actually balloons the food subsidy bill.
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