Finance Minister Nirmala Sitharaman held discussions with a farmers delegation led by BJP MP D Purandeswari ahead of Budget 2026-27 to address concerns over increased taxation affecting tobacco cultivation. The Finance Ministry highlighted the meeting in a tweet, stating that the "Delegation led by Smt @PurandeswariBJP, Honble MP LS, calls on Smt @nsitharaman."

Key Concerns Raised by Farmers

The delegation expressed significant concerns about the potential impact of increased taxation on flue-cured Virginia (FCV) tobacco cultivation. Purandeswari warned that higher taxes could cause distress for numerous farming families and disrupt the regulated marketing system. The Andhra Pradesh, Telangana & Karnataka FCV Tobacco Farmers Federation issued a statement highlighting these concerns.

Impact on Legal Trade and Revenue

The farmers delegation cautioned that significant tax hikes might reduce legal trade while boosting illicit activities, potentially leading to revenue losses for the government. They emphasized that starting February 1, there would be a notable rise in tax on legal cigarettes, which could affect demand and trade dynamics.

Farmers from Andhra Pradesh and Telangana specifically informed Sitharaman that their crops were ready for auction next month. They expressed fears that increased taxes might lower domestic consumption, leading to price drops and unsold stock.

Market Stability Concerns

The delegation highlighted several potential negative impacts on market stability:

• Pressure on auction processes
• Reduced buyer participation
• Decreased overall trade confidence
• Adverse effects on farmer livelihoods

The farmers stressed the need for careful consideration of these factors to avoid negative impacts on their income and the rural economies dependent on tobacco cultivation. The meeting underscored the importance of balancing taxation policies with the economic realities faced by tobacco farmers to ensure a stable market environment.