Basic customs duty removed, agri infra cess halved on lentils

Area under pulses continues to remain low in the current kharif season, raising the spectre of the government resorting to trade-restrictive measures like imposition of stock holding again in November-December.

The government on Monday reduced the basic customs duty (BCD) on import of lentils (masoor) from countries other than the US from 10% to nil, and halved the agriculture infrastructure development cess on lentil imports to 10% to stem rising prices. If lentils are imported from the US, the BCD will be 20% as against 30% earlier.

The government has been concerned about the supply constraints and increase in the prices of pulses, a relatively cheaper source of protein for the masses. Lowering import taxes on lentils is expected to boost domestic supply and check rising prices, Finance Minister Nirmala Sitharaman said in Rajya Sabha.

The rise in prices of pulses had forced the government to put stock limits on July 2, a step not in conformity with its free trade concept after it diluted the Essential Commodities Act in June 2020. Last week, the government eased the restrictions a bit due to traders’ protest.

Pulses have a weight of 0.64% in the wholesale price index (WPI) and 2.95% in the consumer price index (CPI). WPI inflation in pulses eased a tad to 11.49% in June from 12.09% in the previous month. Retail inflation in ‘pulses and products’ stood at 10.01% last month, up from 9.39% in May, and remained much higher than the headline CPI inflation of 6.26%.

Area under pulses continues to remain low in the current kharif season, raising the spectre of the government resorting to trade-restrictive measures like imposition of stock holding again in November-December.

According to agriculture ministry data, pulses acreage was down 10% from the year-ago level as on July 23. Unless the acreage in Rajasthan and Madhya Pradesh reaches last year’s level, the country’s kharif pulses production may be badly hit this year, trade sources had told FE. The monsoon stalling for three weeks has affected sowing of pulses, and the recovery after the revival of rain seems patchy.

As a small drop in production could lead to a jump in prices of pulses, the government has been monitoring sowing progress to ensure it reaches at least the previous year’s level. Pulses acreage was at 8.73 million hectares as of July 23 against 9.72 million hectare a year ago. The Centre has set a target to achieve 9.82 million tonne output this kharif season.

Wholesale prices of all pulses (except masoor) have fallen by 3-4% in the last two months and retail prices dropped by 2-4%, the government said on July 19. The all-India average retail price of chana, tur and masoor dal was `76, `104 and `85 per kg, respectively, on July 24, consumer affairs ministry data showed.