The Survey proposed direct transfer of fertiliser subsidy to farmers and a comprehensive reform package in the fertiliser subsidy to address the problems of leakages and skewed mix of fertiliser use.
Even as the government spends Rs 73,000 crore annually – about 0.5% of GDP – on fertiliser subsidy, as much as 41% of urea is diverted to the industry or smuggled across borders to Bangladesh and Nepal, says the Economic Survey.
The Survey proposed direct transfer of fertiliser subsidy to farmers and a comprehensive reform package in the fertiliser subsidy to address the problems of leakages and skewed mix of fertiliser use. Nearly 70% of subsidised amount is allocated to urea, the most commonly used fertiliser, making it the largest subsidy after food. The Survey said that 75% subsidy on fertilisers has caused a large price wedge feeding a thriving black market.
"They encourage urea overuse, which damages the soil, undermining rural incomes, agricultural productivity, and thereby economic growth. Reform of the fertiliser sector would not only help farmers and improve efficiency in the sector," said the Survey. In the three eastern states bordering Bangladesh 100% of farmers had to buy urea in the black market. In Uttar Pradesh, 67% of farmers had to buy urea in the black market, as subsidised urea had been smuggled to across borders.
The Survey has also asked for finding an alternative to the minimum support price (MSP), believing that its impact is quite limited "In Punjab and Haryana, almost all paddy and wheat farmers are aware of the MSP policy.
However, very few farmers who grow pulses are aware of an MSP for pulses. Even for paddy and wheat where active procurement occurs, there is a substantial variation across states – with only half or less paddy and wheat farmers reporting awareness of MSP, especially in states such as, Gujarat, Maharashtra, Rajasthan, Andhra Pradesh and Jharkhand."
According to the Survey, public procurement at MSP has disproportionately focused on wheat, rice and sugarcane and perhaps even at the expense of other crops such as pulses and oilseeds.
More so, the Survey states there was no rationale in exempting the entire income from agriculture from tax when 85% economic activity and 94.4% individual population is already out of the tax net. The government proposes to widen the to bring 23% population under the tax net, which includes rich farmers and realty sector.
Reacting immediately, Congress spokesperson Randeep Singh Surjiwala said the party will oppose tooth and nail the idea of imposing tax on farmers.
"Having failed in its attempt to usurp their land through the amended land acquisition ordinance, it seems that the government is seeking revenge against the farmers by taxing them," he said.
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