New Delhi: When it comes to the politically sensitive question of taxing agricultural income, different government agencies seem to be speaking in different voices.
A few days ago, Niti Aayog member Bibek Debroy reportedly made comments in support of taxing farm income. This was promptly denied by Finance Minister Arun Jaitly the next day to avoid any political controversy.
[quote]Speaking at a Confederation of Indian Industry (CII) event, Chief Economic Advisor Arvind Subramanian on Friday said, âWhy is it that it is very difficult to make a distinction between a poor farmer and a rich farmerâ¦ When you say farmer, people think that you are going after the poor farmer. So what is it about political discourse that does not allow these distinctions to be made? Why canât we say, rich regardless of where they get their income, should be taxed?â[/quote]
News18 spoke to Dr Ramesh Chand, a member of the Niti Aayog and in-charge of agriculture. He categorically denied that the government think tank had âofficially or unofficiallyâ recommended or even had a plan to tax farm incomes.
âThere is no such plan that I am aware of,â Chand told News18 in an interview in his office. He said that there were some concerns in government about people passing off their illicit cash as agricultural income, thus avoiding paying tax on it.
[blurb]Taxing farm income has been a thorny issue and it comes at a particularly sensitive time for the government. [/blurb]
One of the most important issues that this government is considering in the field of agriculture is raising farmersâ incomes. In fact, Finance Minister Arun Jaitly announced in his budget speech of 2016-17 that the aim was to double farm incomes in 5 years.
That has become one of the priorities for the government according to Dr Chand and the timeframe is the next 3 years. "By 2020 we want to achieve this target,â he said.
Taxing farm income would be seen as undermining this move. It would be interpreted as the government giving with one hand and taking away with the other.
[blurb]As it is, the issue of taxing farm incomes is a politically sensitive one. From the days of "jai Jawan, jai kisan" farmers have occupied an often romanticised space in the national imagination.[/blurb]
The reality is that farming has become mostly unviable as agriculture has become a mostly hits and misses operation. Decades of under investment, coupled with the vagaries of the weather and shrinking land holdings have contributed to the problem.
Agriculture today employs around 55% of the workforce, but contributes just 18% to the GDP. It is in such an economic context that the Government's wish to double farm incomes must reckon with various statements that are calling for taxing agricultural income.