As the fine print of the Budget 2021 was crunched and studied, one new cess suddenly caused palpitations—the new Agriculture Infrastructure Development Cess (AIDC). First comments, particularly on social media, expressed an alarm over an imminent increase in the price of fuel as well as alcohol.
The AIDC on petrol will be Rs 2.5 per litre and Rs 4 on diesel. The budget also proposes the cess to be imposed on about 14 items, ranging from alcohol, gold and silver to palm oil, soya bean, sunflower oil, apples, coal, lignite and peat, select fertilisers, some lentils and raw cotton. The lowest cess is on coal at 1.5 per cent and the highest for alcohol at 100 per cent.
The figures led many to believe that it will lead to all-round inflation once the price of petrol and diesel went up. Tipplers also expressed concern that their choicest liquor brands would be dearer.
However, Finance Minister Nirmala Sitharaman took pains to clarify how this will not lead to any price rise. “It will not cause any discomfort to the end consumer,” she said in an interaction with the media a couple of hours after tabling the budget in Parliament.
“We have reduced the customs duty and levied a disproportionate amount of cess. No price has gone up because of this cess,” she said.
For example, liquor, which currently attracts 150 per cent basic customs duty, will now see that cut down to just 50 per cent. Instead, an agri cess of 100 per cent will now be slapped on it. Net result? The price remains unchanged, at least as far as alcohol is concerned.
So while alcohol and fuel prices remain unchanged (until the next market hike, that is), Sitharaman actually suggests that prices of some of the items being charged an agri cess will actually go down.
The government aims to mop up an additional Rs 30,000 crore this financial year through this cess. “The amount collected will go on to fund the APMC infrastructure,” said Sitharaman. The amount will be added to the Rs 1 lakh crore already announced for agriculture through the Atmanirbhar Bharat stimulus packages announced since May.