Small and marginal farmers toil right through the day to eke out a living by selling whatever little they produce — their primary lifeline. Their second lifeline is livestock which they can count on as a dependable liquid asset. Two recent government steps have aggravated their sense of despondency. While demonetisation and its slow replacement have snapped their first lifeline, confusion and uncertainty surrounding the trade of livestock have rendered the second one unreliable.
This distress situation is not one of the farmers’ making alone. Along with the vagaries of the weather, governments — past and present — too must share the blame. The major share of the farming cost, mostly raised through loans, goes to the government much before the farmer earns a rupee. Therefore, the first thing a government can do – and without any corruption and discrimination – is to do away with all direct and indirect taxes on agricultural inputs such as fertilizers, pesticides, seeds, agricultural tools and implements, power and electricity, packing materials, and local taxes. Such a drastic but direct intervention will help the farmer grow his produce at a lower cost, reduce his need for borrowings and bring down rural indebtedness.
Exorbitantly high taxes on diesel have increased transportation costs, which constitute the single largest component of the end consumer price of many farm products. Therefore, to facilitate a remunerative price to the farmers and contain inflation, taxes on diesel, and on a whole set of vehicles primarily meant for transport of “peoples’ goods” need full exemption. Movement of “peoples’ goods” must be completely exempted from road tolls, and all direct and indirect Central, State and local taxes. Herein lies a long-term economic solution to the problem but it calls for strong political will to implement.
Jose Augustine,
New Delhi
