In Haryana's rice bowl, taxes and unfriendly state policies blamed for closure of paddy processing mills

In Haryana's rice bowl, taxes and unfriendly state policies blamed for closure of paddy processing mills

In Haryana's rice bowl, taxes and unfriendly state policies blamed for closure of paddy processing mills

//election angle, we need this... in fact, we have lede with this - let's speak to HRMDA general secretary Jitender Kumar. The millers have been unsuccessfully going on strike. how will they be pushing their case before/after elections... are candidates meeting with them and issuing promises? We'll start with this...will his vote depend on the his interaction with various political parties?//

In Haryana’s rice bowl, taxes, ‘unfriendly’ state policies blamed for closure of paddy processing mills

Kaithal: The first thing that catches the eye is the faded yellow signboard with the word ‘best’ etched on it in muddy brown hues. Fastened on the entrance gate of Best Food rice mill in Karnal in Haryana, it stands a mute witness to the vagaries of time. For the 1,000-odd former employees of the once-prosperous mill, the sign was a feel-good factor, a constant assurance that they were working for the “best”.

But then the mill, which started operations in 2001 and at one point boasted an annual turnover of Rs 1,000 crore, closed down after the management applied for bankruptcy last year.

The other mills in the rice producing belt, which includes Kaithal parliamentary constituency, have fared no better. Four other major rice mills - Dunar, Ramdev RP, Shaktibhog and The Siddhivinayak - were declared non performing assets (NPAs) in the past five years.

Those involved in custom milling of rice in the region say that Goods and Services Tax (GST) in addition to state taxes has narrowed the profit margins and other “unfavourable” government policies have squeezed the mills dry.

What is Custom Milled Rice (CMR)

Custom Milled Rice is manufactured by milling paddy procured by the state government, state agencies and the Food Corporation of India (FCI) through these mills. In Haryana, paddy is mainly procured by state government, state agencies and the resultant rice is delivered to the state government and FCI by getting the paddy milled from rice millers. The government buys non-basmati rice varieties for distribution to the poor families under the public distribution system (PDS).

Apart from custom millers, there are rice mills that also buy paddy to sell in the open market. Most of these millers buy Basmati variety.

Double taxation

According to Amarjeet Chhabra, president of Kaithal Rice Mills Association, there are 225 rice mills in Kaithal, with a combined annual turnover of Rs 7 thousand crore. //but just Best mill was doing turnover of 1000 crore? the impact of its closure must have been big.//

“But 90 percent of these mills are running in losses for which government policies are to be blamed. The government rolled out the GST but failed to revoke a 4 percent bazar tax,” Chhabra said. The tax is collected by the government to sell the grain in the market.

Rice miller, Narendra Kumar Miglani says that not only has Haryana failed to revoke bazar tax after implementation of GST but it also remains among the states with highest bazar tax slabs.

“The bazar tax imposed in Haryana is as high as 4 percent, while in Rajasthan it is only 1.8 percent. States like Madhya Pradesh and Punjab have stopped charging any such tax,” Miglani says.

Another issue is lack of storage capacity in government warehouses. Chhabra says that 39 lakh metric tonnes of rice was to be delivered to the state government by March 31, but only 24 lakh metric tonnes have been delivered as there is no space in government warehouses. This means mills aren't able to move their milled rice and accept new orders.

Deputy regional manager, FCI, Srikant Prasad, admits that the government is grappling with shortage of space to store rice. “This year has also seen a fall in demand for rice from other states so until we clear the old stock it is difficult to buy more,” he says. //is it because of increasing self-sufficiency of other states? is it a trend?//

The millers also alleged discrimination by the state. The millers are paid Rs 8 per quintal for the transportation of rice to government warehouses while independent contractors are paid up to Rs 20 per quintal.

The millers also say that taxes have forced them to shy away from building a brand and capitalizing on the ‘brand value’.

Miglani says that a 5 percent GST is levied on branded rice, which would further jack up the prices, so many millers prefer to sell their rice without branding it.

Miglani says that in the past couple of years, many millers have shut shop and moved to neighbouring states with more favourable policies. “Who will the paddy producers sell their stock to if there are no buyers?” he says./

No export policy in place to protect our interest: Millers

Mahendra Garg, who has been a miller for 20 years in the industry, says that often they are forced by the government to purchase low quality paddy under pressure from farmers who often organize protests when they can’t find buyers for their yield. And while there are policies to save paddy farmers from distress, none exist for the millers.

Mahendra Pal Mittal, director, Best Food, says that there is no government policy to support the losses borne while exporting rice. “Credit purchase is common in the trade, but if the importers reject the delivered product, the exporters bear huge losses. Exporters have written several times to the government asking it to formulate a scheme in this regard, but to no avail.”

Agriculture expert Dr. Dilip Gonsai says that another reason behind declining exports, and thus profits, could be that many countries avoid buying Indian rice, particularly from Punjab and Haryana, as here farmers use large quantities of fertilizers and pesticides. About 8 to 10 percent of total rice milled is exported to Britain, Netherlands, France and Germany. But recently these countries have adopted strict rules and are rejecting rice exposed to tricyclozole fungicide.

Threat to paddy growers

Experts say that loss of rice mills would ultimately trickle down to paddy growers as well. Pramod Chauhan, president, Yuva Kisan Sangh, says that 13 lakh hectares in Haryana is under paddy cultivation employing about 16.17 lakh families. “They stand to suffer if rice mills are not provided timely protection.”

Rajiv Miglani, who has been associated with the milling industry for 25 years, says that not long ago Haryana was bustling with at least a 1,000 rice mills, but the number has been rapidly dwindling.

“Millers in other states Punjab do not have to pay taxes on basmati and are receiving many incentives and facilities, but that is not the case in Haryana,” says Miglani.

He adds that their grievances have fallen on deaf ears and any candidate who promises to address their issues will definitely attract interest.

Millers also rue the fact that though the mills are in operation for nine months, they have to pay electricity charges on pro rata basis even for the remaining months when they are shut.

Elections, a glimmer of hope

Members of Haryana Rice Mill Association rue that no politician has taken up their cause. Neeraj Mittal who runs Shri Giriraj Mill says, “Political parties should take up the millers’ cause. If the government continues to be apathetic, it would be disastrous for the industry.”

State president of Indian National Lokdal, Ashok Arora, says that if voted to power their party would address the grievances of the millers. “We will work towards boosting export of rice as well as selling it to other states.”

Congress state president Ashok Tanwar says that the “BJP’s anti-millers policy is to be blamed for the situation”. “The BJP government rolled out note ban and GST which has killed our industries. Rice mills are going bankrupt and unemployment is high. The Congress would definitely take up this matter once in power. Rice farmers are also unable to get a good price for their produce. We will work towards creating a favourable situation for both.” //Congress spokesperson Randeep Singh Surjewala is the MLA from the area. What has he done to revive the industry?// does he knows what its problems are?



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