A huge amount of tax collected under the Krishi Kalyan Cess (KKC) has become a bone of contention between two ministries in the government. According to sources, the ministries of Finance and Agriculture have locked horns over the distribution of Rs 7,000 crore collected from the KKC, which has been levied on all taxable services at the rate of 0.5 per cent.
According to sources, the agriculture ministry has claimed its right over the fund citing that the amount collected via cess is solely meant to finance activities for the improvement of agriculture and welfare of farmers. “When the tax is being collected in the name of welfare of farming sector, how can that amount be routed to other ministries and that too when the government has set the target to double the farmers income by 2022,” the source asked, adding that the ministry has raised its strong reservations over the utilisation of KKC fund during budgetary consultations.
According to sources, the Finance Ministry is of the view that the KKC fund should be distributed among the Rural Development Ministry, which is headed by Narendra Singh Tomar and Ministry of Water Resources, which is headed by Uma Bharti.
“Given that the funds collected from Education Cess were distributed among different ministries rather than giving it only to Human Resource Development Ministry, the KKC fund would also be distributed among different ministries to promote their schemes meant for the farmer’s welfare,” a source in the Finance Ministry said.
The issue has reached the Prime Minister’s Office and a final decision on the issue would be communicated to the ministries soon so that it helps in budget preparation.
“Since Agriculture Ministry is the nodal agency for farmers’ welfare, the fund would give a push to the creation of infrastructure in farm sector as the ministry is also planning to launch some new schemes in 2017,” the source said.
Notably, the government had given a major push to agriculture in the Union budget by raising the allocation from Rs 24,909 crore in 2015-16 to Rs 35,984 crore in 2016-17. And if the KCC fund comes to its kitty, the farm ministry expects the budgetary allocation for 2017-18 to be about Rs 45,000 crore.
To help farmers get remunerative prices, the Centre has also launched National Agriculture Market to connect 585 regulated wholesale markets across the country. Reviving the farm sector is a major challenge for the government.