What is Agriculture Infrastructure and Development Cess (AIDC)? Will Prices Rise?

The buzzword of the Union Budget 2021-22, presented by Finance Minister Nirmala Sitharaman, is Agriculture Infrastructure and Development Cess (AIDC). Everybody is talking about the imposed cess and whether it will impact their pockets.  

Will agricultural items, petrol and diesel, apples, alcohol, etc. become costlier?  

Let us first understand what cess is.

What is Agri Infra Cess?

Agri Infra Cess or Agriculture Infrastructure and Development Cess (AIDC) is a tax that the Indian government imposes on the commercial production of agricultural produce. The rate charged depends on the production capacity. The money that the government will collect through this cess is used for infrastructure development in agriculture across the country.  

To put it in simple words, the government needs funds to develop infrastructure and carry out various projects. The government collects these funds from commercial productions around the country in the form of tax or cess.  

So, in case of agriculture cess, the money taken from commercial agricultural producers will be then used to develop agriculture.  

Now, by imposing cess on industrial alcohol, cotton, apples, lentils, peas, chemicals, etc., the government hopes to raise a fund of around Rs. 30,000 crore.  

The government intends to use this collected money to build infrastructure facilities for post-harvest produce in the mandis.  

Now, whether this was an attempt to win the farmers who have been protesting at the borders of the National Capital of India is another matter. But, talking of cess, particularly AIDC, this is a brief description of what cess is and how government collects funds and uses it for infrastructure and development of a particular industry, in this case, agriculture.  

As Finance Minister Nirmala Sitharaman said in her budget speech that, “there is an immediate need to improve agricultural infrastructure to produce more, while also conserving and processing agricultural output efficiently.” According to her, this step will ensure increased remuneration to farmers.   

And yes, don’t worry about your pockets. Imposition of AIDC does not mean things will become costlier. The Finance Minister has assured this in her speech. You won’t have to pay more. So, relax and eat that apple!