Union Finance Minister Nirmala Sitharaman clarified on Monday that the new agriculture infrastructure and development cess which was announced during the budget on Monday won’t be passed on to the consumers or states as it has been carved out of the additional excise duty imposed by the Central Government on certain goods such as petrol and diesel.
She said that to compensate for the additional cess, the government has reduced the excise duty component, resulting in no additional cost for the public.
“What we are essentially doing is carving out the cess from the customs duty only for the purpose of funding infrastructure in the agriculture sector,” Sitharaman told Network18 group editor-in-chief, Rahul Joshi, during an exclusive interview on Monday.
“The important part is that the end consumer is not going to pay one rupee more. The reduction in customs and the imposition of the cess cancel each other out and is not going to burden the consumer,” she said at the interview which was aired on CNN-News18.
During the budget speech on Monday, Sitharaman proposed an agriculture infrastructure and development cess of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel.
Other items like gold and silver will have a cess of 2.5 percent, alcoholic beverages will have a cess of 100 percent, crude palm oil will have a cess of 17.5 percent and there will be a cess of 20 percent on crude soybean and sunflower oil.
Citing the example of gold, Sitahraman said there was a basic customs duty of around 12 percent, which has now been brought down to say 7 percent, and then the agriculture infrastructure and development cess (AIDC) of three-four percent has been added on that, resulting in the net price remaining around the same for most goods.
Explaining the rationale behind the move, she said she wanted to create a separate fund for agriculture, which has been one bright spot in the economy that was hit hard by the COVID-19 pandemic.
“There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently. This will ensure enhanced remuneration for our farmers,” Sitharaman had said in her budget speech.