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Government must engage in a collaborative effort with farmer groups

There is an ambiguous provision to levy income tax on “dairying”. Either the provision should be removed or it should be clarified that it does not include dairy farmers. Dairying is a part of agriculture and as per the Constitution, it is a state subject.

Written by Ajay Vir Jakhar |
Updated: January 24, 2020 11:33:25 am
PM Kisan Yojana, Pradhan Mantri Kisan Samman Nidhi Yojana, PM Kisan Yojana scheme, scheme for farmers, government scheme for farmers, Indian Express The Centre cannot levy income tax on dairy farmers. (File Photo)

Those in power may not yet be accepting blame for the barrage of negative news on the state of the economy, but cracks are appearing in the facade. In such tumultuous times, the finance minister began the pre-budget ritual of consultations. Having inherited a mess, she faces the challenge of very limited latitude for budgetary allocations. Her task is compounded by a bureaucratic decision-making process that is incapable of factoring the imponderabilia of actual livelihoods — one that does not even properly enumerate those committing suicide.

The financialisation of policy-making has set us on an unforgiving trajectory where the corporate sector has wrung out a commitment from the government of spending Rs 102 lakh crore on infrastructure projects. It would have been wiser to prioritise investments in human capital. With around one per cent of this spend, the government could have filled all the vacancies and upgraded the ability of agriculture researchers, farm extension workers, teachers, doctors and similar professionals across India. There’s a lot that those in power don’t know, and they don’t know that they don’t know. This has culminated in a supply-side response to a demand slump, predicated on cutting corporate taxes instead of stimulating consumer demand by raising spending under MGNREGA or a one-time higher PM-Kisan dole out.

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Since, it’s equally important to augment government revenues, a beginning can be made by scrapping schemes such as the Pradhan Mantri Fasal Bima Yojna and saving over Rs 20,000 crore annually. The government would be better advised to go back to the drawing board in consultation with farmers. Similarly, alcohol must also be brought under the ambit of GST at the highest tax slab. After states are compensated for forgoing their alcohol revenues, the central pool will benefit by an additional Rs 30,000 crore. It’s also time to impose a tax on digital services and e-commerce companies rather than reduce PDS allocations to rein in the ballooning deficit as proposed by some economists.

Changed circumstances and new understanding requires innovative approaches to policy-making. The government must finance a long-term study for developing a metrics for valuing farm eco-system services whereby farmers are paid for services to conserve the environment in a way that ensures economic sustainability of the farmer and also India’s food security. For instance, farmers can be paid for rainwater harvesting and upkeep of trees. The tricky part though is to devise a differentiating metric for varying agro-ecology — a particular tree, for example, is valued differently in a rainforest and a desert. A systems approach is radically different from the present structure. Past experience indicates that it would be foolhardy to expect the Indian Council of Agriculture Research to develop one. Having perpetuated a kind of agricultural practice, it can’t be expected to purge itself. Rather than lose another two decades, it is advisable now to engage in a collaborative effort with a consortium of farmer organisations.

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There is an ambiguous provision to levy income tax on “dairying”. Either the provision should be removed or it should be clarified that it does not include dairy farmers. Dairying is a part of agriculture and as per the Constitution, it is a state subject. The Centre cannot levy income tax on dairy farmers. Removing such quirks will improve ease of doing business. A simple notification to mandate a minimum purchase price of Rs 32 per litre for milk by institutional buyers will help regain some of the lost trust.

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A suggestion that was met with considerable interest at the finance ministry’s meeting was on providing eggs sourced from backyard poultry for the mid-day meal scheme. Backyard poultry is about farmer families keeping chicken at home. The benefits will be multi-dimensional; protein for school children, no-leeway for adulteration, less food miles, families regaining self-esteem, developing community spirit and jobs in all six lakh villages across the country. The enabling factor is not eggs, but the process of sourcing eggs from marginal, small and landless farmers. A competitive bidding process or allowing participation of commercial poultries will kill that very objective.

The finance minister had suggested extending the discussion to local sourcing of other products for mid-day meals. However, the current nutrition policy of India, increasingly influenced by commercial interests, is unlikely to enable it.

This article first appeared in the print edition on January 24, 2020 under the title “Focus On Farmers”. The writer is chairman, Bharat Krishak Samaj.

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