The Union Budget 2016-17 disappointed the middle class who expected some tax breaks. Instead, they now have to bear the burden of new cesses. The rich, those with incomes exceeding Rs 1 crore, will have to pay a higher surcharge on their income. They will also have to pay an additional tax on their dividend income, which is in excess of Rs 10 lakh.
The lower income groups, those with taxable income up to Rs 5 lakh, have something to cheer about – they get an additional tax rebate of Rs 3,000 per year and also higher deduction on rent paid for accommodation in instances where they are not entitled to house rent allowance (HRA).
Most of these measures on the personal income tax side were addressed at reducing inequity in taxation – the richer people bore lower incidence of tax on their incomes than those with limited income.
A Farmer-friendly Budget
While many in urban areas would be unhappy with the union budget, Finance Minister Arun Jaitley’s third budget, however, cannot be accused of not addressing problems of the most vulnerable sections of the country – farmers, and particularly, small farmers. Of the 167 million rural households, over 90 million are engaged in agriculture, and most of them are small and marginal farmers.
These households were the worse hit by two successive years of below par summer monsoon and unexpectedly high rainfall in winters.
- Increased budgetary support for the
initiatives and schemes set aside for farmers.
- MNREGA to be given more funds.
- Benefits of the minimum support price of a
range of crops should reach the farmers
- It’s a challenge to ensure benefits of
Managed Service Provider (MSP) reaches all farmers.
- NSSO report revealed a large number of
farmers were unaware of MSP.
Thus the budget has, as it should have, laid great emphasis on addressing rural distress and easing the difficulties faced by farmers due to failure of monsoon and poor irrigation facilities, unremunerative prices for their produce and lack of access to markets to sell their produce and poor soil health among others.
A number of measures are proposed to be taken in the coming fiscal year, and the finance minister has set aside increased budgetary support for the initiatives and schemes that will address the farmers’ plight.
These include programmes that will increase optimal utilisation of water resources, create new infrastructure for irrigation, improve conservation of soil fertility with balanced use of fertiliser, enhance value addition and connectivity from farms to markets, encourage sustainable management of ground water, augment cultivation of pulses and expand the network of rural roads.
The government’s efforts to support the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) with more funds, after being ambivalent about it for two years, is also a measure that will help reduce farmers’ distresses.
Less Farmer Suicides
Efforts need to be made to ensure that farmers across the country get the benefits of the minimum support price of a range of crops – from cereals such as rice and wheat, pulses, sugarcane, fibres such as cotton and jute and oil seeds. Three specific initiatives are to be taken up in 2016-17 for this.
These are decentralised procurement, online procurement system through the Food Corporation of India – effective arrangements have been made for pulses procurement.
These measures are well intended, but ensuring the benefits of Managed Service Provider (MSP) reaches all farmers is challenging. A recent National Sample Survey Organisation report revealed that a large number of farmers were unaware that the government announces MSP and that it has a procurement process.
The Union budget has also sought to address the issue of indebtedness of small farmers, and their inability to repay loans ending up in suicides. There will be no loan waiver of the kind announced by the UPA government in 2008-09, but the government has planned an interest subvention scheme.
Together with the already announced crop insurance scheme, namely, Prime Minister Fasal Bima Yojana, there should hopefully be a sharp decline in the number of farmer suicides. But then, the effectiveness of the two programmes will depend on their execution and the access farmers would have to assistance under these.
Moving Beyond Food Security
The four schemes to make other farm activities such as dairying more remunerative would also help farmers as many keep livestock to supplement household income.
Measures such as Unified Agriculture Marketing Scheme which envisages common e-market platform across 585 wholesale markets will also help to put pressure on states to amend their high restrictive Agricultural Produce Marketing Committee (APMC) Act to allow easier movement of farm produce across state borders and help transform India’s farm produce market into a less fragmented one.
The whole objective of the farmer-focus on the Union Budget is to move beyond food security for the country to give farmers a sense of income security. The overall objective of the interventions is to double the income of the farmers by 2022. Hopefully, agriculture will become a remunerative economic activity by then.
(The writer is a Delhi-based senior journalist.)
Also read:
Not So ‘Jai Jawan, Jai Kisan’ for Farmers
Unaware of MSP
To Prevent Farmer Suicides, Make Crop
Insurance Mandatory
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