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Policies influencing NTFP management & trade

The state of Madhya Pradesh has many firsts to its credit when it comes to policies related to forests, and especially so NTFP. MP was the first state to nationalise an NTFP, Tendu Leave (TL) in 1964 and then followed it up with nationalising Harra, Sal seed, and Gums. The state let most items go from the list of specified produces and permitted free trade in them way back in 1986, thereby foregoing all royalties from the same. It was one of the first states to come up with a reasonably clear definition of NTFP in 1998. It probably is the only state to have a functioning three tier co-operative structure to procure and trade nationalised NTFP. The same co-operative structure has a clearly laid out policy for distributing incentive wages to primary collectors that has no parallel in the country.

Definition of MFP/NTFP

The MP government has defined Minor Forest Produce (MFP) in response to conferring of ownership rights to Panchayats and Gram Sabhas by central government through a constitutional amendment, Provisions for Panchayat (Extension to Scheduled Areas) Act, 1996. The MP government circular dated 15/05/1998 defines "MFP" as "non timber forest produce which can be harvested on a non-destructive basis and will not include minerals and wild animals or their derivatives". Timber and forest produce will have meaning as given in the Indian Forest Act, 1927. The important aspect to recall here would be the definition of timber as per the said act - timber includes trees when they have or have been felled, and all wood whether cut up or fashioned or hollowed out for any purpose or not. The act goes on to define the trees that include palms, bamboos, stumps, brushwood and canes. This implies those last mentioned items - notably bamboo, are excluded from the list of NTFP and thereby is not MFP in legal terms. The definition refers to harvesting practices (non - destructive) that makes it a subject to debate.

Though there might be case for some debate in the definition, primarily because of the exclusions, this is one of the better and logical definitions in comparison to other states that have tried to define the same.

NTFP Lease & Licensing Policy

Nationalised

Tendu leave was the first item to be nationalised in 1964. In erstwhile Madhya Bharat malguzars and ex-zamindars gave contracts to individual traders for rights of harvesting Tendu leaves till 1951. Abolition of proprietary rights in 1951 vested same rights with the state government, who in turn leased it to contractors. Contractors paid wages to pluckers and royalty to the government. It was observed that this arrangement led to number of malpractices. In view of its importance as an income source for tribal and revenue potential to state government, Tendu leave was nationalised by enactment of Tendu leaves (Vyapar Viniyaman) Adhiniyam, 1964.
The primary objectives for nationalisation were -

  1. Stopping pilferage in government forest and other lands,
  2. Provide definite value for Tendu leaves to growers,
  3. Increase revenue to state,
  4. Provide adequate wages to labour,
  5. Improve quality and quantity of leaves by regular pruning and
  6. Ensure supply of leaves to small and medium manufacturers of bidis

Salient features of the act are

  1. Empowering state government to divide areas into units,
  2. Giving right to collect leaves from forests and carry out trade on its behalf to appointed agents,
  3. Restricting purchase and transport of leaves through transit permits,
  4. Registration of growers of TL,
  5. Registration of manufacturer of bidis and
  6. Empowering state government to make rules to dispose TL.

Convinced by success of nationalisation of TL that was nationalised in 1964, Harra, Sal seed, and gums were added to the list later on. The year of nationalisation of above produces are as follows - 1969 - Harra and Gums, 1975 - Sal seed. Collection and trading of gums, a specified produce, was being carried out by the FD itself or through its agents from 1970. But it was observed that the trees were being destroyed due to deep tapping. Therefore, the state government banned extraction of gums in 80's. This ban was lifted in 1995 and controlled extraction was permitted.

Mahua was nationalised in MP in 1969 -70, but was withdrawn in 3 years. Ostensibly this was done as more trees were found to be in private lands, the logistics was mind boggling as the tree was spread in most areas, and it was too important (edible, staple food for some during certain seasons) an item to be nationalised. But government was fixing support prices till very recently. The permission of FD was required for storage of Mahua till 1996, when the trade was delicensed and made free to allow collectors to freely market their surplus. Now one can hold Mahua without any restriction.

Similarly in 2000 - 2001 season, Chironji and Aonla were nationalised in selective parts of MP, but were later withdrawn in the same year for the above reasons. What could also have influenced the decision is role of the traders lobby that seem quite influential in the state.

The state was a leading producer in most of the items that have been nationalised. The state accounted for nearly 45% of TL and 75% of Harra production in the country. Erstwhile eastern MP (present Chhatisgarh) along with Orissa and Bihar is the leading region for production of Sal seed. Similarly in case of most of the gums, the state is the leading producer. This resulted in these produces being actively collected and traded in the state. This might have played a crucial role in deciding about nationalisation of the produces.

Nationalisation in one sense has been about giving monopoly rights in trading - while local people can collect items under nationalised list, they can only sell it to government or forest department or any other agents so appointed by former. The produce in the nationalised list, even if grown in private land, has to be handed over to government agency, albeit at a higher rate. The private growers of nationalised items are required to register with government to get these higher collection rates.

Three primary objectives have been put forward for nationalisation of any item - giving fair deal to collectors, sustainable harvesting and increased revenue to state from forests. While till recently it has been seen that state has been interested in the revenue aspect more then any other reasons. This can be said because it has focussed on those items (TL) that are able to give more revenue to its coffers to the neglect in management of others (Sal Seed, Harra and Gum). As we will observe, whereas things have definitely taken a turn towards better after the days of co-operatisation and then PESA in the majority revenue earner i.e. TL, situation is more or less the same for other nationalised produces.

Specified

Some produces were defined as specified forest produce as per MP Van Upaj (Vyapar Viniyaman) Adhiniyam, 1969. The state government under this act empowered to make rules as it deems fit for disposal of specified forest produces. Prominent among specified produces are - Kullu Gum, Dhawra Gum, Khair Gum, Babool gum, Sal and Salai resin, Rosha Grass, Lac in all forms, Mahua Flowers and seed, chironji, Guthli, Sal seed, Harra and Kacharia, Mahul Leaves, Phool Bahari, and Bamboo. Mahua flower and seed were removed from specified produce in 1972.

Free Produces

In 1986, state government stopped system of royalty on all non-nationalised NTFP. Prior to 1986 it was mostly royalty system with minimum collection prices announced that was prevalent in the state for all such produces. In affect, all the produces apart from the nationalised ones were now open for free collection, storage and trade.
However, once purchased by trader and when it is transported from a haat to any other place, a transit pass is required from concerned forest authorities. Primary logic given for stipulation of transit pass is that it helps restricting unsustainable harvesting practices. Transit pass is the only medium through which FD can know the amount of forest produces harvested from a particular area.

The SDO (ACF) issues a TP to the trader after proper verification and authorisation from concerned DFO. A transit pass is required as many times as produces are transported from a haat, or after a transaction. Validity of TP stays in force for 4-5 days and for only one transaction/ journey. In the process, sometimes, transit pass is required more then once for same produce to be transported may be in diminished quantity. Mahua and Charota are exceptional cases where TP is not required. Mahua has been exempted from Excise act in 1996.
But once a produce is processed, there is no need for a transit pass. The concerned agency has to however keep supporting documents regarding transport of raw material and processing accounts. Similarly, though no registration is required with forest department for setting up of enterprises in case of free produces, it is required that stock books are maintained and comply with transit passes drawn and issued in support of trading and transportation.

Some of the privatised NTFP can be traded in Mandis primarily meant for trading in agricultural produces. Though Mandis do not have any special facility for trading of NTFP, Mandi Tax is imposed on volume traded on the buyer.

The trader needs to register if he or she wants to import produces from outside the state with all details about forest produce being imported and transit permit issued.

In case of any produce, (even free produces), under exceptional circumstances, forest department or DFO can restrict harvesting of the endangered specie(s). There are some NTFP that are restricted either in whole state or in certain districts. This list may change time to time and from district to district. Most barks have now been banned for trading all over the state. Similarly Sal seed (after the borer attack in the mid 90s) and Aonla are currently banned in some districts.

Government Regulations in NTFP trade

Registration Requirements

There are quantitative restrictions on transport, production and processing of specified forest produces. The primary logic for restrictions given is that it will facilitate tribal community for bonafide use and restrict illegal trade in such products. A transport permit is to be obtained from DFO in case of purchase of specified forest produces beyond this quantity and transport will be restricted to the specified route and permitted during daytime only. The buyer has to obtain a certificate of purchase from concerned officer and show it whenever demanded by police or forest department officials. Agencies have to register with local DFO for establishing enterprises that use specified forest produces as raw materials.

 

Table: Quantity Restrictions under MP Van Upaj Rules (In KGs)
Name of Produce Transport Production Processing or Consumption Sell through
retail
Trader Consumer
Kullu 0.1 1 1 1 0.1
Dhawra/ Babool/ Khair/ Salai 1 1 1 5 1
Harra 5 200 1 5 5
Sal Seed 50 50 1 5 5

 

Local Taxes
Table: Tax on NTFP Produces in 2000-01(per centages)
Sl. No. Commodity Sales Tax Surcharge
on ST
Entry Tax Nirashrit
Tax
Mandi
Tax*
1 Amchur 4 15 0.5 0 0
2 Aonla 0 0 0 0 2
3 Baibidang 8 15 0 0 0
4 Ban Tulasi 8 15 0 0 0
5 Char Guthli 8 15 0.5 0 2
6 Chironji 4 15 0.5 0 2
7 Dhawai Phool 8 15 0 0 0
8 Harra         2
9 Hill Grass 0 0 0 0 0
10 Kaju Seed 8 15 0 0 0
11 Karanj Seed 4 0 1 0 0
12 Kosa 8 15 0 0 0
13 Kulthi 0 0 0 0 2
14 Kusum Seed 4 0 1 0.2 2
15 Lac 0 0 0 0 0
16 Mahua Flower 8 15 0 0 2
17 Mahua Seed 4 0 0 0.2 2
18 Mango Kernel 0 0 0 0 0
19 Mustard 4 0 1 0.2 2
20 Niger Seed 4 0 1 0.2 2
21 Paddy 2 0 0 0.2 2
22 Phool Jhadu 0 0 0 0 0
23 Seasame 4 0 1 0 0
24 Siali Leaf 0 0 0 0 0
25 Shikakai 4 15 0.5 0 0
26 Tamarind Bricks 4 15 0.5 0 0
27 Tamarind Deseeded 4 15 0.5 0 2
28 Tamarind Seed 8 15 0 0 0
29 Tamarind Seeded 4 15 0.5 0 2

 

* On selling price collected from buyer

The traders give 2% Mandi tax and 4% commercial tax if trading is within the state. For trading outside the state purchaser has to obtain a C-FORM from the sales tax office and give it to the seller. In that case the seller will give only 4% tax, otherwise 10% tax will be given. For Nationalised/ Leased NTFP - 22.2% income tax, 2% forest development tax, 4% sales tax is collected on bid amount.

 
 
 
 
 
Regional Centre For Development Cooperation