(In response to the article published in The Economic Times on 9 January, 2008…though a bit late)
Associated Chambers of Commerce and Industry in India (ASSOCHAM) is planning to raise the issue of introducing income tax for farmers with finance ministry. This is based on the survey conducted by our great industry body ASSOCHAM. Surprisingly, the participants/respondents in the survey are 300 CEOs. The results of the survey indicate that about 80% of the CEOs (respondents) are in favor of bringing the farmers under the tax net. It is also reported that the industry body will highlight the results of the survey during their pre-budget consultations with the Ministry of Finance.
We need to appreciate the efforts of ASSOCHAM and the CEOs participated in the survey for their ‘concern on the revenues of government’.
Unfortunately, Government of India’s published reports indicate that at least 1.5 lakh farmers have committed suicide from 1997 to 2006 in the country. These suicides are reportedly higher in ‘richer, prosperous and industrialized’ states. NSSO survey on indebtedness of farmers during January to December 2003 reported that 43.42 million (48.6%) farmer households are indebted. Another report of NSSO reported that average expenses and receipts for cultivation per farmer household, during July 02 - June 03 for which the data is available, was Rs.20,315 and Rs.8,791 respectively. This means an average income of Rs.11,524 per annum which turns out to be Rs.960 per month per household. This income may be less than your ‘pocket-money’. This income will not increase significantly even if we assume that farmers are involved in other activities for income generation in villages.
Imagine a household (family of a farmer) managing all his needs and of his family in less than Rs.1000 per month. These average figures are for one agriculture year. If we consider the situation over the years the income may turns out to be negative (loss) in some years due to droughts, floods, crop loss due to pest and insect attack or price fall. Farmer has to save the income earned in one year to protect his family, if possible, against the possible crop loss in the subsequent year. We have insurance guarantee for many things in the country but not for agriculture. Government has introduced insurance against rainfall, recently, which is dependent more on political conditions rather than rainfall conditions. My father is still waiting for the rainfall insurance for the year 2003. Agriculture is one of the toughest and riskiest professions where farmer has to play with nature and unethical market forces.
Our great industry association and CEOs want to impose income tax on these farmers. Great concern!!! What prevented these CEOs and ASSOCHAM from raising the issue of farmers’ suicides with government if they are really concerned? How many of these CEOs and businessmen who earn lakhs and crores are paying the tax honestly? How many hi-tech companies are paying the salaries honestly without diverting the salary in the name of bonus to avoid income tax?
What was the logic of involving only CEOs as respondents in the survey? Why not farmers and others? That too the sample size of the survey was only 300. How representative is the sample?
When more than 1.5 lakh farmers committed suicide in the last few years what action did the association and CEOs took apart from conducting surveys for agri-business companies? What moral right do they have to ask farmers to pay tax? At least, let them clarify who the farmer is in this country. Is it Amitab Bachhan or Deve Gowda or a poor man who has dependent on agriculture for his livelihood? In fact, businessmen, politicians and people like Amitab are evading the tax by showing their income in the name of agriculture and these are the real culprits.
It is to be mentioned that the aggregate measures of support (AMS) offered to farmers in our country is negative. This means that farmers are cross-subsidizing consumers. This trend is not seen in any other sector. These CEOs demand the government to provide tax incentives for export if the Dollar value is falling to maintain their profits. When farmers are cross-subsidizing and committing suicides what prevented these CEOs from raising the issue with government? At least let them pay the right price for the farmers’ produce and stop exploitation.
Why our government is not holding any pre-budget consultations with farmers’ groups? Why only with industry bodies? Even god cannot save the poor farmers from the bias of government and the so called ‘CEOs’.
Thank you CEOs for your concern.
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12 comments:
there are many flaws in your argument, let me tell you
1. an "indebted" farmer household includes those who have taken agricultural loan. for years nationalized banks have provided such loans without recieving the paybacks.
2. in any case if a farmar earns less than Rs.110,000 he does not need to pay any income tax. so the questions of taxing "poor farmers" does not arise.
3. the 2003 data basis which you say that farmers are earning Rs.960/- per month is not above questions. our experience differs at many places where farmers have an average monthly income of Rs.6000 and above. one main reason why Godrej and Uniliver entered those villages to set up their "rural market outlets".
Ayan
Yes i agree with you that the indebted farmers have not paid the loan. But, one has to know the reasons behind that. In majority of cases these indebted farmers have committed suicides. We are not paying the right price to farmers, our government has not provided any safety net for crop loss....in one word I can say that we are not helping them really.
The loan amound that has to be paid by farmers is very less when compared to industrialists. The default amound of industrialists is much more.
Farmers have a valid point even if the income is more than Rs.110,000 for a particular agriculture year. This year is different from a typical 1,April-31,March. There is no guarantee of income for a farmer over a period of time. In one agriculture year he may get more than 1.1 lakh and next year there may be complete loss due to conditions beyond his control. Where as a CEO will get his salary monthly irrespective of rainfall. He has the option of changing the job at any time and income is continuous. But, farmers don't have continuous income and there is no protection for them.
We have to look this issue from a wider perspective. If we don't mnake farming profitable and provide incentives there is a threat of food insecurity which has large repurcussions on our society and the nation.
We have to provide incentives to farmers rather than taxing for our own welfare. The work of farmer cannot be compared with others. We can't do anything if he leaves farmeing and invest in other sectors.
We have to realise that all the people who have taken more loans in the name of agriculture are not the actual farmers.
At last, the data is avilabe only upto 2003 and there is not much changes till now. How many farmers do we have who are earning Rs.6000 or more and is it continuous?
Thanks for commenting
@ Ayan,
you can see that I have not made a statement on imposing or not imposing tax....But, I have questioned the moral right of CEOs and the way survey was conducted.
man!! u sound royally pissed off with ths one!!!
ur right in sayin tht CEOs don't represent the farmers..
simple logic is tht whoever comes within the taxable income has to pay tax. irrespective of their profession.
P.s. wht is cross subsidizing??
At knatchbulley
Objectivity cannot be applied and applicable practically. I think you can understand some things experience.....
Farmers in most of the developed countries are highly subsidized compared to Indian farmers. With the implementation of WTO and imports our farmers have to compete with those of developed countries and thus our farmers are loosing out. There are no good protective measures.....and because of such factors now-a-days farming is becoming unviable option...and around 50% our farmers are not interested in it given an option. If we donot provide incentives and protect our farmers food production will be affected....and this will be a greatest threat and challenge for our country. In the interest of us and our country we have to provide incentives and not tax the farmers...
If you know any problems of farmers and their condition probably you might not have made the such statement...
cross-subsidising...in simple terms is the amount paid to farmer for food production is less than the production cost......it means he is making the losses and you are exploiting him....for details you can contact some of your friends from economics....
I started this blog for creating awareness....because people are misguided by media...and we cannot be insensitive
Thanks for your comment. I would like to have healthy discussion. If you have any clarification..pls raise
if the farmers earn and come within the taxable income.. why not???
newayz.. don't take too much tension. nothing of tht sort will happen. at the most, the farmers will stay at their present condition.. but they will not be taxed.
what will happen to all the politicians and movie stars who evade tax under the pretext of being agriculturists!!! they are never gonna allow farmers to b taxed.. indirect saviours!!
To earn Rs.125000 typically farmer has to invest around Rs.60000. This he has to compulsorily invest every year to earn. If there is a crop failure he will be under loss and has to sell his land etc. This Rs.125000 alone cannot be considered and taxed...whereas a CEO will not invest every month or year...
If we don't provide incentives for farmers we have to face food insecurity...which is very serious for the country. Already we are importing oliseeds, pulses and also wheat. If we don't pay right price and protect them we will be loosers.
Government can control the actors, politicians and others who are claiming as farmers.....where there is a will there is a way...
First of all we should understand the logic of tax. Why to tax and whom?
Hi sudharsan!
Our FM and PM are more concerned to develop CEOs, not poor farmers. Only farmers and agri graduates like you and me can understand problems of farmers. See one guy is yelling in american english saying that every body has to pay tax. He must be from Delhi and might have never been to villages.
Interesting post. I'd be interested to hear a more pragmatic perspective on how the farmers and their very valid opinions, concerns and longings can be fairly represented on the public domain and the market place of ideas. Mind you, you were referring to the 'economist'... you would hardly hear a poor farmers tax problems in those pages. Perhaps, what we need is a more implicit story telling... on the grass root level! I'd love to hear you respond.
Hi Saju
Thanks for the comment...Yes, I would like to write more on farmers issues. Support of people like is required.
Any form of compulsory taxation is crime of socialistic government against Individuals, the citizens!
WOW!! I had missed such a wonderful blog these days!! your words are true to the core!! experiencing Indian agriculture especially in dry lands is hectic..our investments are often gulped by failing monsoons!!and we are left with empty hands!! I am a student and I daily milk my cow, irrigate my land in my holidays and at the end of the year my father yell about our lapsed loan payments and debts!thanks for ur visionary blog :)
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