Whatever good NITI Aayog was created for is yet to show
The reasons behind replacing the erstwhile Planning Commission with the NITI Aayog are yet to be demonstrated. The new body was projected as replacing the "inefficient" commission with a group of experts who would keep giving suggestions on improvement.
The commission was an entity with financial authority. It directed state spending and to a great extend it was successful in promoting "planned development" programmes in the country. It was an entity which rolled out a map for state governments' engagements with the central government.
But then the NITI Aayog came along with the new concept of consultancy suggestions and individual opinions as policy suggestions. Every policy decision of NITI Aayog came as a personal suggestion and, in fact, it gradually turned into a decision.
The scrapping of the rail budget is an example. One of the members of the Aayog had been campaigning for scrapping of the budget and later it became a policy. There is a separate railway budget now and it proposes to privatise railway services in a big way. It is an ongoing project.
The latest one is taxing farmer income. The finance minister denies any such intervention, however, there is a consensus being evolved towards taxing of farmer income. It is going to be a reality soon.
Prior to this proposal, NITI Aayog had put forward the idea of doubling farmer income by 2022 in its Policy Paper No.1/2017. The paper documented some of the disturbing features of Indian farmers and gave a detailed account of the number of farmers below poverty line spread across states.
According to the paper, Jharkhand has 45.3 per cent poor farmers, Odisha 32.1 per cent, Bihar 28.4 per cent and Madhya Pradesh 26.5 per cent such farmers. The figure stands at 22.2 percent at the national level. Considering the mass crop failure, natural calamities and poor monsoon, the figure moves up every month. This is an unnoticed reality.
The policy paper envisioned that the agricultural sector should have 10.4 per cent annual growth to achieve the targeted double income by 2022. But the Indian agricultural sector can never ensure such linear growth to achieve double income.
In principle, it is an important project. Farmers should get decent income and better facilities to continue farming. It needs major fiscal support to farmers and there is no autonomous method of growing agriculture income. It grows along with credit and investment subsidies.
No farmer can exist in the country without subsidy and better support price. If they are earning well, there is absolutely no issue in collecting taxes. So any such proposal should have a broader plan to increase the income of farmers.
NITI Aayog proposes the following strategies to achieve the target by 2022 a) improvement in productivity b) resource use efficiency or saving in cost of production c) increase in cropping intensity d) diversification towards high value crops.
The sources outside agriculture include shifting cultivation from farm to non-farm occupations and improvement in terms of trade for farmers or the real price received by farmers. But these are simply consultancy suggestions and there is silence on capital investment in the agriculture sector.
Agriculture Census 2010-11 shows 67.10 percentage of operational holders are marginal farmers. And there is considerable decline in the average size of holding since 1970-71. So it is the responsibility of the government to assess the taxability of farmers based on operational holdings and income after self-consumption.
The NITI Aayog paper itself shows the agriculture price received by farmers remained depressed. The price of agricultural produce was much lower (6.88 per cent) than inflation in the Consumer Price Index for Agricultural Labourers and Rural Labourers (CPIAL) was 10.52 percent during 2011-12 to 2015-16.
The per-cultivator income is calculated at Rs 1,20,193 at current market prices. Higher CPIAL reduces the real income of farmers. Among them the marginal farmers are the worst-affected.
Taxing farmers needs broader intervention, including tax reforms as everybody knows that agricultural income is exempted from tax. Section 2 (1A) of the Income Tax Act exempted the following sources of income from taxes (a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes (b) any income derived from such land by agricultural operations including processing of agricultural produce so as to render it fit for the market or sale of such produce (c) any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in Section 2(1A).
This is in fact one of the most misused provisions in the income tax process. Big corporates and individuals use this option to evade taxes. Own agriculture land and put all unaccounted income as farm income is the biggest corruption in the country.
There should be a procedure to tax the rich who are using the label of "farmer" to evade tax and there should be taxes on farmers who cultivate cash crops which have a huge global market. This needs structural interventions such as regularising farm wage, access to credit and market connectivity, etc.
Such decisions should not come as opinions.