At pre-budget meet with FM, farmers demand scrapping of GST on agri inputs

A delegation of farmers, which met Union finance minister Nirmala Sitharaman last week, has sought scrapping of the Goods and Services Tax on farm inputs, two people who attended the meeting said on Monday.

Sitharaman held a pre-budget consultation with the farmers and farm economists on Saturday where she sought suggestions, and took note of various issues and demands of the farming community, the people cited above said.

The finance minister sought to know farmers’ views on how the government’s policies were performing on the ground and what more could be done to improve productivity and resilience of a sector that still employs close to half the population, according to one of the participants.

During the pre-budget consultations, several farm leaders sought scrapping of the Goods and Services Tax, or GST, on agricultural inputs, such as seeds, manure and pesticides. “Most farmers feel that GST on agricultural inputs is a big burden and should be waived off. We proposed this strongly. The finance minister listened to our demands, took notes and assured that all possible steps to decrease costs of cultivation will be taken,” said Dharmendra Malik, national spokesperson of Bharatiya Kisan Union (Arajnaitik).

In the absence of a legal guarantee on MSP, the BKU demanded that the formula for calculating the cost of cultivation for determining minimum support prices should be widened and indexed to a cost measure known as C2, instead of the current “A2 + FL” method.

The so-called C2 measure is broader yardstick of a farmer’s cultivation cost, which includes all farming expenses, family labour and the imputed cost of land and machinery. Malik said the BKU presented a 15-point demand, including prohibiting imports below federally fixed floor prices, which hurts farmers.

A large group of farmers are currently protesting on Delhi’s borders and seeking to march to the capital, demanding a legal guarantee for minimum crop prices.

“Another key demand was to enhance the cash benefit under the PM Kisan scheme to at least ₹10,000- ₹12,000 due to increasing inflation,” a second participant, who declined to be named, said. Under PM-KISAN, the government provides income support of ₹6,000 a year to farmers with a valid enrolment, paid in three equal cash transfers of ₹2,000 — one every four months. It was launched on 24 February, 2019, when the first instalment was paid.

The FM told the delegation that the Modi government had taken several unprecedented policies to benefit farmers and it will never let farmers to suffer, Malik said, adding the FM “assured” to look into the issue of GST on agricultural commodities. “The demand to waive off GST was unanimous,” Malik said.