During the Finance Minister Budget Review Meeting, the Agri Execs ask for Rationalization of GST Rates

Finance Minister Nirmala Sitharaman held a pre-budget meeting with agriculture economists and industry participants on Friday to gather insights before the upcoming budget.

The conference, attended by finance ministry officials and the chief economic advisor, focused on subsidies, taxation, and the revival of the agricultural sector. During the discussion, representatives emphasized the need to rationalize GST rates on agricultural inputs. Currently, the GST on pesticides is 18%, while water pumps attract a 12% rate. This disparity was highlighted as needing adjustment to support the agricultural sector more effectively. Participants also raised concerns about double-digit vegetable inflation, which has persisted for over six months, reaching 27.3% in May. Economists warned that ongoing heat waves, particularly in northern India, will likely exacerbate the situation. Improving value chains is a critical step in addressing this issue.

Another significant financial concern discussed was the current subsidy system. Finance Personnel’s, Economists and industry participants advocated for direct transfers of subsidies to farmers’ accounts instead of the existing method. This sentiment was echoed in a previous meeting with industry bodies, where an increase in the PM-KISAN transfer from the current ₹6,000 per annum was recommended. The interim budget had allocated ₹60,000 crore for the scheme. The meeting also addressed the broader challenge of reviving the agricultural sector, which has seen growth decline to an eight-year low of 1.4% of GDP in FY24. Representatives suggested measures to tackle climate change and boost agricultural growth as essential steps for recovery. Overall, the pre-budget meeting underscored the pressing need to rationalize GST rates, address vegetable inflation, and reform the subsidy system to support the agricultural sector’s revival.