An Anti-farmer Proposal

Suggestion to tax agricultural income shows gap between policy makers, farmers

Written by K C Tyagi | Published:May 31, 2017 12:05 am
pune civic elections According to him, the removal of exemptions on personal income tax and bringing agriculture under the tax net will increase the government’s revenue. (Representational)

When the farming community across the country lives in precarious conditions, certain statements by members of the Niti Aayog have shocked farmers. The opinion of the members is even more important as the PM presides over the Niti Aayog. The suggestion of bringing agricultural income into the income tax structure was proposed by a Niti Aayog member: Bibek Debroy recently said that the number of taxpayers must be increased by eliminating exemptions on agricultural income. According to him, the removal of exemptions on personal income tax and bringing agriculture under the tax net will increase the government’s revenue. This recommendation is part of a 15-year perspective plan circulated among the states at the Niti Aayog’s governing council meeting.

Fully aware of its sensitivity, Finance Minister Arun Jaitley had to issue a statement from Moscow; he had to clarify that there is no intention on the government’s part to tax agricultural income. He clarified that taxation on agricultural income does not come under the Centre’s jurisdiction.

In his article, (‘12 reasons why’, IE, May 3), Debroy listed certain “facts” supporting his statement. Most of the taxation provisions enlisted by him were either archaic or bizarrely irrelevant. Moreover, he also refused to accept rural and urban disparities in income which, according to him, is an “artificial distinction”. Both his assumptions are not only flawed — they seem ludicrous.

Agriculture’s share in India’s GDP is around 14-16 per cent while it has 49 per cent of the total manpower and 64 percent of rural manpower. The main reason for a large part of the population being dependent on agriculture is small land holdings and less productive farming techniques. This is why the per capita income of agricultural labourers and farmers is extremely low. According to the State of Indian Agriculture report (2015-16), the number of land holdings of one hectare or less has increased by 23 per cent in a decade. The number of such plots in 2000-2001 was 75.41 million, which increased to 92.83 million in 2010-11.

According to the report, based on the calculations of the 70th round of the National Sample Survey, nearly 9.6 million farmers of the country have 0.5 hectares or less land. The total monthly expenditure of these families is more than their monthly consumption spending. For instance, the number of farmer families holding 0.41-1.0 hectare of land is 3.15 crores. The total monthly income of each such family was Rs 2,145 from farming activities. Earnings from agricultural labour (Rs 2,011), livestock (Rs 629) and non-agricultural works (Rs 462) comes to around Rs 3,102. The total from all sources is Rs 5,247, whereas the monthly consumption expenditure of marginal farmers and households is Rs 6,020. Moreover, agricultural output fluctuates far more than the industrial and services sectors. In this bleak situation, the proposal to tax agricultural income is not only irrational, but also speaks to the gargantuan divide between policymakers and farmers.

Today, there is a perception in farming communities that the Niti Aayog is drafting policies to benefit industry and corporates. Instead of clearing the air, statements speaking of taxing agricultural income affirm such distrust. Where there is a trust deficit, inequality and oppression, there is resentment and violence. The Naxal problem is a quintessential example.

Governance is fundamentally different from management. It requires empathy and moral integrity. The Niti Aayog was envisaged as a “think tank” and tasked with formulating policies and guidelines for the government. It has been said that those who cannot remember the past are condemned to repeat the same mistakes. If the Aayog does not want to go on the lines of the erstwhile Planning Commission, it must engage in course corrections. A more inclusive approach of policy formulation and dialogue with farmers’ organisations, state governments and other stakeholders may strengthen the cooperative federalism envisioned at the foundation of the Niti Aayog.

The writer is a Rajya Sabha MP from the JD(U). Views expressed are personal

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  1. S
    SP
    May 31, 2017 at 8:57 pm
    Bibek Debroy had quoted those having extremely high income say 80 Lacs not getting taxed by showing it as agriculture income
    Reply
  2. M
    mahesh
    May 31, 2017 at 8:48 pm
    Tyagiji, oppossing modi and talking sense are two different things. Income tax is for people having income over a certain amount. The amounts what you suggested in your article are way below the limits. Many of your brood falsely claim to be farmers but are super rich. The Niti aayog advisory for those kind of people
    Reply
  3. S
    S Srinivasan
    May 31, 2017 at 8:22 pm
    Jaitley has correctly pointed out that agriculture is a State subject and the individual states can enact various means to extract the maximum income from the rich farmers and support the poor farmers. In case of famine,drought etc.rich farmers can survive but not the poor souls.The State should find additional resources to fund the poor farmers but not burden them further.NITI ayog or any other central mechanism should not interfere in State subject.
    Reply
  4. A
    akp
    May 31, 2017 at 6:37 pm
    These politicians show their dirty money as agriculture income and get away. what is harm in taxing a farmer who is earning say more than 20-25 lakhs per year.
    Reply
  5. H
    hypo crite
    May 31, 2017 at 6:14 pm
    Govt of bourgeoisie.
    Reply
  6. D
    D K
    May 31, 2017 at 5:48 pm
    If agriculture income is computed as business income is computed under the provisions of the I T law, there can be no taxable income from agricultural activities. Those who are batting for exemption of agriculture income are,out of ignorance or design working in favour of tax evaders who declare their tax evaded income as agricultural income.Levy tax on declared agriculture income and spend the revenue so collected exclusively on agriculture sector. This will be a step in favour of the farmers and not against them as generally perceived.
    Reply
  7. R
    Rajat
    May 31, 2017 at 5:46 pm
    The author didn't understand the basic premise of the move. Mr. Debroy had clearly mentioned that the tax will be levied on farmers having very large holdings, say at least 20-25 acres. No one is proposing to tax a laborer or farmer with small landholdings. What distortion of facts to suit his own narrative.
    Reply
  8. A
    angel
    May 31, 2017 at 5:39 pm
    FREE FARMERS FROM PRICE CONTROL , MARKET CONTROL ACTS , ALLOW AGRICULTURE PRODUCE FROM TO BE SOLD FROM ONE STATE TO ANOTHER. THEN WE CAN ALSO REDUCE SUBSIDY IN THE NAME OF AGRICULTURE, THEREAFTER LEVY INCOME TAX ON AGRICULTURE. NO ONE WILL COMPLAIN. BUT NO POLITICAL PARTY WILL EVER DO IT INCLUDING THE PRESENT SARKAR
    Reply
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