“Farming is in my blood. But I nearly gave it up couple of years ago because of water crisis,” says Reddy, who grows rice, groundnut and red gram. “But the crisis was averted because we decided to share groundwater”.
Anantapur is the second-most backward and drought-prone district in India. Over the past six months, 22 farmers have committed suicide in Anantapur.
Till 2010, the water shortage was manageable. “We did not have to dig deep; we used bullocks to draw water from wells to irrigate our lands,” recalled Venkat Ramana Reddy, a 50-year-old farmer.
Post 2000, the region’s semi-arid weather, deep hard rock aquifers, perversely incentivised power and monetary subsidies, and absence of any formal legislation or social regulation to govern extraction led to competitive borewell digging, all of which led to a rapid fall in groundwater levels. The water shortage led to tension between borewell and non-borewell owning farmers, even as cultivation of water-intensive crops continued.
Read: India’s groundwater crisis
India draws more groundwater each year than the US and China combined; with 89% of groundwater extracted used in the irrigation sector. With rain the most significant source of groundwater recharge, any change in the rainfall pattern influences the groundwater level.
India has a rough estimate of how much groundwater it has but there is no micro-level data and this hampers groundwater management at a localised level.
“The national aquifer mapping programme can help generate granular data for groundwater and make it available for public policy. The idea is to show groundwater is not an infinite resource that can be pumped out endlessly,” said Mala Subramaniam, CEO, Arghyam, a Bangalore-based non-profit. “Second, gram panchayats should be equipped with the basic understanding of hydrogeology and traditional knowledge to help them manage the groundwater efficiently”.
TAKING THE BULL BY THE HORNS
Instead of blaming the monsoon and fate, farmers at Kummaravandla Pally joined hands with the government and WASSAN, an NGO, to tackle the crisis in 2010. After a situational analysis, 25 farmers formed a collective – Kolagunti Ummadi Neeti Yajamanya Sangham — to “share groundwater with each other” to sustain their crops.
Watch | How farmers from Anantapur found a solution to the groundwater crisis
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This led to the concept of networking of borewells to secure rain-fed crops of all farmers, irrespective of borewell ownership. By linking all borewells with a network of pipelines and outlets, all farmers can now access groundwater. To ensure compliance, the farmers signed a MoU in the presence of district officials.
The agreement’s institutional norms include the following clauses: The committee would have farmers with and without borewells; a joint account would be opened in the names of these members; equal contribution towards share capital, irrespective of borewell ownership; annual contribution towards the maintenance fund, on per acre basis at Rs 100 per acre; one farmer would be elected for monitoring the schedule for water distribution/allocation and also collect contribution from each member.
Read: Six charts that explain India’s water crisis
There are non-institutional norms for sharing too. No new borewells should be dug for 10 years without the permission of committee; the irrigated area under borewells will not be increased but the critically-irrigated area can be ; in the critically irrigated areas, water should be given for sowing, flowering, pod development, and crop harvesting; crop budgeting exercise must before sowing ; the System of Rice Intensification, which uses less water, should be practiced for paddy cultivation; micro Irrigation system (drips and sprinklers) should be used to conserve water; and any repairs to the borewells during critical phase (June to November) will be borne form the maintenance fund. During the rest of the year, borewell maintenance will be done by the owners.
FINE PRINT: The Borewell Sharing Agreement
Farmers with or without borewells can join, if they contribute equally towards share capital
Members have joint accounts; annual contribution towards maintenance fund is Rs 100 per acre
One farmer elected to monitor water allocation and collect contribution
No new borewells for next 10 years, irrigated area to remain the same as 2009
Critically irrigated area can increase, but water provided for four key crop phases
Crop water budgeting exercise a must before sowing
If paddy is cultivated, the System of Rice Intensification (SRI) should be practiced
Micro irrigation system such as drips and sprinklers to be used to conserve water
The farmers got financial support from the government for pipeline network and regulators for connecting existing borewells, sprinklers and drips systems. For promoting diversity in agriculture, the National Food Security Mission and the agriculture department provided red gram and groundnut seeds were provided free.
Government schemes such as horticulture plantation in five acres of land; water and soil conservation works under the MGNREGS and NADEP compost pits for non-pesticide management are used by the farmers.
The agreement led to a new way of agriculture in the 72 acres of land of 25 farmers. Since 2010, the cropping pattern has changed, leading to diversity of crops, reduction in costs of cultivation; improvement in value of produce and profit.
According to a study by the Department of Rural Development and Social Work, Sri Krishna Devaraya University, Anantapur, the use of pipeline system instead of field channels has increased water use efficiency. Critical irrigation helped in preventing crop loss, and raised productivity of groundnut. Groundwater levels have been sustained since 2009 , while the area under agriculture and critical irrigation improved, shows data.
Thanks to the success of this borewell pooling, the Andhra Pradesh government is scaling it up across the state via the Indira Jalaprabha Scheme.
In Telangana, several villages in six districts — Mahbubnagar, Ranga Reddy , Warangal, Medak, Karimnagar and Adilabad — are piloting this participatory groundwater management programme.
The author tweets at @kumkumdasgupta
The Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 came in response to an understanding in the state government, that the policy and legislative environment for investment sensitive, investor owned and controlled business was being increasingly opened, while usage-sensitive, user owned and controlled business continue to be very tightly controlled. In order for rural producers and others to engage with labour, financial, commodity markets effectively, it was understood that disadvantages communities needed a more liberal cooperative law.
However, the G.O.28 significantly takes away the spirit of autonomy available in the AP Mutually Aided Cooperative Societies Act, 1995. The G.O. assuming that cooperatives as “peoples” institutions – Cooperatives are not peoples’ organisations; they are their members’ institutions. The GO restores some of the key provisions to the department of cooperation (excluded in APMACS Act 1995) that have been used over decades to control cooperatives. These provisions include:
- The Government is competent authority to make provisions, from time to time, take necessary steps for making provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principle of voluntary formation, democratic member control, member economic participation and autonomous functioning as deemed necessary – which goes against the spirit of the right to form cooperatives. The bylaws of the cooperative could be compulsorily amended, again, even against the general body’s resolution to the contrary. Earlier this provision was almost always used to exempt the government or the registrar from fulfilling responsibility, such as the timely conduct of elections, audit.
- The powers given to the Registrar for registration and renewals which is against the spirit of the right to form cooperative. If Cooperatives are filing returns, it is the responsibility of registrar to verify and take measures at their level. Why do they go for renewal? The department as well as cooperatives would develop a vested interest.
- Admission of members and removal from membership and intimation to Registrar within 30 days: Government can make effort to ensure that the registrar would play its role in enable the cooperatives, and then regulate only where regulation was imperative. But keeping these types of provisions would undermine the functions and role of the management of cooperative societies.
- Size and term of the Board: The 1995 Act has sought, through this provision, to prevent to the extent possible, any vacuum in management, which has been experienced under the 1964 Act, to bring in the dreaded “Person-in-Charge” for the interregnum. By having less than half the directors retiring at any time, the 1995 Act has tried to ensure that there is always a quorum, and a democratically elected body is in position.
- Functional directors in the Board: Coopt persons as the functional directors to the Boards of cooperatives, and resolutions of the board could be annulled, if the nominated directors were uncomfortable with them. This means, all the cooperatives are in the hands of “professionals”. These people will have influence on decision making of the board without having membership responsibilities, ownership on the affairs of cooperative, accountability and liability of financial results of the cooperatives
- Conduct of elections: Based on experience, It is simply not possible for any third party to organize elections to all tiny and large cooperatives when their elections fall due. It is also not possible for them to print ballot papers with specific symbols chosen by candidates of each cooperative – the result is that ballot papers are printed en mass; common election dates are fixed for similar type of cooperatives; the fixing of common dates requires the deliberate withholding of elections where those have become due, for ease of management by the external party; politicisation takes place as media and parties begin to get involved in the results of a large number of cooperatives going to elections on the same day. In fact, the cost of elections shoots up as centralized printing, security arrangements, TA/DA of officers, etc, are all to be borne by the cooperatives. Further, centralized elections reinforce the misconception that cooperatives are state agencies.
- It is responsibility of every cooperative society to conduct member education programs based on their activities, need and importance. What way TSCU is concerned about it. Who will bear the certification cost? Who is benefiting from this clause???
- All amendments to bye-laws require registration in this GO. The company law requires registration only to changes in the memorandum (which provides the ‘identify’ of a company). Amendments to articles only required filing of the amendment for record. This is why, in the 1995 Act, amendments to only key provisions were listed for registration- the rest were to be sent for taking on record only.
- Registrar’s role to fix the staffing pattern, qualifications, pay scales and other allowances to the employees of the society; this will undermine functions & role of management. If registrar is involved, staff of cooperatives, feel more privileged in society than accountable to the cooperatives that they work with.
- Supersession of the Board and appoint the official Administrator(s) to manage the affairs of the society: Elections to cooperatives were not their own business – they are conducted by the registrar, under government fiat. Where other provisions had rendered the cooperative impotent in its business, provisions related to elections made the cooperative a potent political instrument in the hands of the party in governance, for accommodating party workers who could not be made legislators. Elections were withheld for years in most states, and often held under court directions.Elected boards could be superseded by the government/registrar on any number of times either for serious or frivolous charges, based on ‘the opinion of the registrar’. In this case, restraining the board for not conducting elections on time as per their bye-laws is contradicting.
- Dissolution by Registrar: A cooperative is a creature of its members, and, therefore, it provides for the members to choose not to continue their association with one another, to dissolve their cooperative.
- Settlement of disputes by registrar: If the registering authority is given the right to unilaterally dissolve a cooperative on any of these counts, as such right may lead to unhealthy practices.
In the 1995 Act, the approach was to ensure that the department would not develop a vested interest in cooperatives, even while it had some core corrective measures in its hands. The effort was to ensure that it would play the role of registration, and then regulate only where regulation was imperative, and that these functions would not be undermined by any management role.
It’s reasonably well known that income from agriculture attracts no tax in India.
What isn’t quite as well known is that of more than 400,000 taxpayers claiming exemption for agricultural income in the assessment year 2014-15, the biggest were seed giant Kaveri Seeds—it claimed Rs 186.63 crore exemption and made a profit of Rs 215.36 crore before tax—and multinational Monsanto India, which claimed Rs 94.40 crore as exemption from agricultural income and earned Rs 138.74 crore profit before tax.
Agro-companies growing crops are allowed the same tax relief as individuals in states levying no agricultural income tax, although some states do indeed tax some kinds of farming.
On 39 million Indians, falls the country’s tax burden
The rural crises that beset India are unprecedented this century, but agriculture also hides a number of companies and rich farmers, whom no finance minister will tax–although with their numbers declining, as we shall see, these are reasonably easy to identify.
“Agricultural income is exempt from taxation in spite of large agricultural holdings,” said the 2014 Third Tax Administration Reform Commission (TARC) report. “…a large number of rich farmers, who earn more than salaried employees in the cities, get away with paying no tax at all in view of the government’s lack of will to consider an agricultural income tax.”
The aversion to taxing agriculture is the fallout of a colonial experience when farmers were taxed, but it is not very widely know that some states do indeed tax some farms.
Why agriculture has–largely–not been taxed for 130 years
When India introduced income tax in 1886 under colonial rule, income tax on agriculture was kept out of its ambit because of existing land levies and the right to collect any form of agricultural income tax was vested with the main colonial administration.
In 1935, the right to land revenue, and to potential agricultural income tax, was transferred to the provinces, today’s states. Since then, each state has developed its own agricultural income- tax policy, with wide interstate disparities.
Consider these examples:
- Uttar Pradesh introduced agricultural income tax in 1948, and repealed it in 1957, one of six states to flip flop thus in the first decade post Independence, “to move away from oppressive agricultural taxes under the British, one of the reasons for the freedom struggle”, said Indira Rajaraman, leading economist and RBI Chair Professor, National Institute of Public Finance and Policy, New Delhi.Or, because “the meagre prospect of revenue of the tax on income arising from cultivation of non-plantation crops and also the growing cost of collection compelled some states to abandon this tax in course of time”, writes Biswadeb Chatterjee in Tax Performance in Indian States: A Comparative Study.
- Assam introduced agricultural income tax in 1939. But it levies the tax, up to 45% (the highest slab), only on tea-cultivation income.
“Leaving agricultural income taxation to individual states has resulted in plantations in Kerala being taxed at 50% while our competitors in neighbouring Tamil Nadu pay no tax,” said Thomas Jacob, managing director, Poabs Estates, a 6,000-acre coffee, tea, cardamom and pepper plantation.
“High taxes leave us with very little to reinvest in the land; consequently, plantations in Kerala, including our own, are loss-making,” said Jacob, who is also vice chairman of the Association of Planters of Kerala. “Talk about one India must translate into practical action; agricultural income tax should be totally abolished or be made uniform across India.”
How bigger farmers justify their agricultural-income-tax-free status
States should pass a resolution under Article 252 of the Constitution authorising the Centre to impose tax on agricultural income, and all such taxes collected by the Centre, net of collection costs, could be transferred to the states, said the 2014 tax administration reformreport.
Against a tax-free limit of Rs 5 lakh on agricultural income, farmers with incomes around Rs 50 lakh could be taxed, recommended the report.
That’s easier said than done, of course.
Large farmers and agro-corporations with tax-free agricultural income wield significant clout over the government and they will lobby against it.
Khushwant Singh, 43, writer and novelist, farms 12.14 acres in Punjab, a state where the average farmer holds 3.77 acres of land. There are 367 others like him in Punjab with holdings above 4 hectares, classified as medium farmers, or above 10 hectares, classified as large farmers, potential taxation targets, some economists argue.
Here’s how some big farmers and farm companies justified their stance against agricultural income tax to IndiaSpend.
“With yields across India having stagnated and most farmers lacking bargaining power to sell their produce, agriculture doesn’t leave much on the table for farmers. Significant economies of scale don’t kick in from farming large tracts of land because the cost of key inputs–seeds, fertiliser and water–rises almost proportionately,” said Sandeep Saxena, managing director,Big India Farms, a farming and food-chain supply company.
“Other business activity isn’t curtailed, whereas the land ceiling act restricts the land holding per family. Treat agriculture like any other business, hike the land ceiling per family to 100 acres at least; then consider taxing agricultural income,” said Khushwant Singh, a writer and novelist who farms 30 acres.
In Punjab, the law permits a family to hold 17.50 acres of irrigated land; and up to 32 acres of barren land without irrigation.
A 17.50-acre farm is not enough to support a family nor does it justify mechanisation, said Singh. A tractor becomes cost effective only at double that size.
Singh, his father and his brother collectively farm 60 acres and own two tractors between them. To augment family income, Singh senior has started a dhaba and Singh’s brother runs a resort, Citrus County.
Land prices have appreciated so significantly in rural India that the temptation to cash in is immense.
“We earn 0.1% of the value of our land; what businessman would stick on with those terms? Clearly, the math is against agriculture as a profession,” said Singh. “We’ll stick it out, but our next generation will definitely not live on the farm.”
Fewer big farmers should make agricultural income tax easier to administer
Conventionally, taxes are based on self-declared income.
“Self-declaration has been shown to work in plantation agriculture, which is closest to manufacturing in terms of scale of operation, year-round operation, formal records of accounts and links to the banking system,” said Rajaraman, the economist.
Assessing taxable agricultural income on the basis of declared figures would be arbitrary, and in all likelihood, lead to endless appeals.
“How could the revenue officer make objective assessments of income or challenge the declared income when it depends on so many variables and no criteria exist to define those variables? Rainfall, the sun, soils pests and diseases, irrigation, etc. are some of the influencing factors,” said Sudhir Prakash, chairman, DLX Ltd, owner of Glenburn Tea Estate, Darjeeling, West Bengal, and an associated tea estate in Assam.
West Bengal does not tax agriculture produce or plantations, whereas such tax in Assam is more or less at par with central income-tax rates, 45% as we said.
Source: Agriculture Census 2010-11
The silver lining could be the dwindling number of medium and large farmers, defined as holdings exceeding 4 hectares and 10 hectares (24.7 acres) respectively, as per the 2011 agricultural census, as well as the acreage held by medium and large farmers. Today, India has roughly two-thirds of the number of medium farmers it had in 1971, and about a third of the number of large farmers.
The big earners would be easy to target, tax and draw into the banking system. Medium and large farmers make up 10% or more of the farming community only in four states: Punjab (35%), Rajasthan (22%), Gujarat (12%) and Madhya Pradesh (10%), according to the 2011 agricultural census.
Agricultural income declared by taxpayers, in returns filed up to November 28, 2014, for exemption in the 2014-15 assessment year, stood at Rs 9,338 crore.
Source: Agriculture Census 2010-11
“Currently, transactions in the farming sector (except plantations) are mainly in cash,” said Prakash. “To track transactions, you need them to be routed through the banking infrastructure, and to transact through banks, you need ‘literate farmers.’”
How panchayats could tax agricultural income
If farmers do not use the banking system and maintain accounts, could rich farmers be taxed on the basis of what they have assumed to have earned?
Farmers could be taxed based on the area sown with high-return crops, proposed Rajaraman in a 2004 paper Taxing Agriculture in a Developing Country: A Possible Approach. High-return crop cultivators whose yield falls below a stipulated threshold would be exempted for the sake of fairness.
She suggested, in her 2003 book, A Fiscal Domain for Panchayats, that such tax be collected by village councils.
“Property tax is paid locally, why not tax on agricultural income?” said Rajaraman. “Agriculture thrives only when law and order prevails, and the panchayat governs locally. Farming makes use of local utilities, so it should give back locally.”
That would make local governance more responsive than it might by receiving handouts from Delhi, as the recent budget provided for with Rs 2.78 lakh crore ($41.34 billion) in grants topanchayats (rural councils) and urban local bodies, or above Rs 80 lakh per panchayat.
“A panchayat that benefits from tax collection is more likely to ensure compliance,” said Rajaraman, “than a distant state government.”
(Bahri is a freelance writer and editor based in Mount Abu, Rajasthan.)
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NEW DELHI: Delhi High Court today restrained Indian firm Nuziveedu Seeds from selling Bt cotton seeds using the trade-mark of US-based agro major Monsanto’s Indian arm Mahyco Monsanto Biotech Ltd (MMBL).
Justice Vipin Sanghi also asked the Hyderabad-based seed company to pay the royalty to MMBL, a joint venture between US-based Monsanto and Mahyco, after selling the old stock manufactured prior to November 2015.
The bench restrained Nuziveedu Seeds from selling seeds manufa ..
2009: Goriparti Narasimha Raju, Andhra Pradesh
2012: T Vengatapathi Reddiar, Tamil Nadu