Doubling farm incomes is a planned gamble where the odds are stacked against the farmer. For the farmer, quitting is not an option; his life depends on it and he is quite ill equipped to change occupational tack. Yet, his own occupation is not a matter that he quite controls; he is what government policies allow him to be in a world where failures of policies to achieve objectives are legion.
More importantly, such failures are commonly attributed to implementation hurdles. This attribution is broadly misleading and only narrowly true. Policies primarily fail to deliver because of flawed design. The proposed beneficiaries — the farmer — and those who are to actually implement the programmes, like patwaris, block development officers and such other members of the administrative system, are not taken into confidence at the drawing board stage.
This is best exemplified by the GST Constitutional Amendment Bill, India’s biggest tax reform. The model GST law draft will leave one laughing, literally in splits; before the horror of how utterly ruinous it will be for farmers and vis-à-vis farm policy actually sinks in, especially when a doubling of the farmer’s income is a starred government agenda.
Doubling farm incomes requires the government to at least deliver on its basic promises. The MSP for pulses was raised significantly to incentivize farmers to grow more pulses. The farmers responded and the acreage has increased substantially. Yet, even before harvest, the prices of moong are hovering below the MSP of `5,225 per quintal, the government has reneged on its promise and has not yet began purchases. If the government continues to remain indifferent, the price will fall further and each small farmer family could suffer a loss upwards of `20,000. The options for famer are limited and he is further burdened with the need to understand the GST.
As per the model GST law, “agriculture” includes floriculture, horticulture, raising of crops, grass, grazing and such others but excludes dairy, poultry, gathering of fruit, raising of man-made forest or rearing of seedlings and plants. For all practical GST purposes, therefore, eggs or cow’s milk may be taxed though selling meat may escape the GST because grazing is considered an agricultural activity.
Growing grass is not in the tax bracket (cutting grass is) but tribals collecting forest produce surely are. Growing flowers is exempt from GST but growing a man-made forest, which is environmentally friendly (to save cutting down of forests), is under the ambit of GST. Possibly, half of all land leasing transactions work is on a crop-sharing basis; where the land owner and the cultivator share costs, inputs and labour in an agreed ratio. Such agreements will be taxed now even though it is impossible to differentiate between agreements on how crops are grown.
One needs to reserve the laughter for later because all this is a legacy of the British Raj and the policy maker does not believe in letting go so easily. Reading the GST will also remind one of the guillotine in France. GST defines “goods’’ as inclusive of growing crops attached to the land that ‘are agreed to be severed before supply’. It almost reads like decapitating the head from the neck where the sale of the tomato sapling, for instance, is subject to tax but selling tomatoes is not.
The government’s farm sector reforms are founded on the proposed land leasing law. As per the model GST law, the “agriculturist” will not be a taxable person. The definition of “agriculturist”, however, is limited to a person who cultivates the land personally. The implication is that any entity that enters into a contract will be taxed. In one stroke, contract farming and land leasing have been dealt a fatal blow.
Not one parliamentarian raised a voice of caution about such lunacy. Farmers watching the Rajya Sabha debate must have wondered why they could not spot a single farmer in the ranks. So many personalities have been nominated to the Rajya Sabha; experts from various disciplines from films to sports: the likes of Sachin Tendulkar (sports) or Rekha (film star), who choose not to attend.
An even more fascinating example is that of cricketer turned comedian Navjot Sidhu, who was nominated for sports, having acquired notoriety earlier or having lost his cool with a motorist and striking him a fatal blow, who preferred to use his position as a stepping stone to furthering his political fortunes.
Many have contemplated the rot in Indian democracy but are unable to suggest a better path. The biggest failure of farmer organizations (including the Bharat Krishak Samaj) has been their inability to galvanize farmers into realizing their true power.
Returning to the GST and other related issues, if only the parliamentarians read what they pass as a law, Indians would not face this interpretation conundrum. The hullabaloo centres on the rate of taxation though logically the specifics of the model GST law should have been questioned first. Politicians conveniently kept liquor out of GST because the trade generates the largest quantum of slush funds for state politicians. If the government’s true intent was to double incomes and enhance revenues, it should have started by simply taxing liquor more.
Many states believe that the mandi tax is not excluded but, in all probability, the GST will subsume the mandi tax and the states are yet to fathom the cascading ramifications. The GST can turn to be as good as it being projected to be but unless key changes are made, the amendments will institute universal misery instead of simplifying and unifying tax rates.
The policy maker’s insidiously worded GST cannot hide the one clear intent to tax farmers. The Bible says: “Beware of false prophets, who come to you in sheep’s clothing but inwardly are ravenous wolves”.