New Delhi: Finance Minister Arun Jaitley has said the government has no plans to tax agricultural income, including that of prosperous farmers, saying a rich farmer is “a very rare institution” and not the norm. In an interview, he said the farm sector is in distress and there was no question of taxing agricultural income.
NITI Aayog member Bibek Debroy had late last month stated that farmers should be liable to pay tax on their incomes at par with other citizens after seasonal fluctuations are adjusted. “I have already contradicted that. I have already said that we are not in favour of doing that,” he said.
Stating that the agriculture sector is under distress, he said farm holdings are very small in size. “The rich farmer is a very rare institution. It is not the norm. It is only a rare exception and therefore, at a time when you need to support agriculture because of the distress, this is hardly the time to deflect the issue and start taxing agriculture. This is not the time. They are under distress,” he said.
The Finance Minister said farmers should be helped and not taxed. “The government is very clear (on that),” he added. “In any case, the Central government has no power. It is the power of state governments (to tax farm income) and my own view is none of the states is going to do it,” he said.
NITI Aayog Vice Chairman Arvind Panagariya has also clarified that Mr Debroy’s comments on taxing farm income were his personal views and not those of the government think-tank. On the ordinance promulgated last week to enable the RBI to order lenders to initiate insolvency proceedings against defaulters and create committees to advise banks on recovering non-performing loans, Mr Jaitley said NPA resolution will take time but the process has to be expeditiously started now by the banks.
“Already the ordinance has been approved. The authorisation has been given. The RBI itself has come out with some guidelines. Some management changes have taken place.” “Now the next stage is that through the JLF mechanism, the resolutions should start and we do expect the banks to cooperate in making the JLF mechanism a success,” he said.
The mechanism of JLF, or the joint lending forum, came into effect in 2014 with the intention of recognising stressed assets early and coming up with a corrective action plan (CAP) within 45 days. The system, however, did not work seamlessly as there were disagreements between lenders on how to move forward on individual accounts. Mr Jaitley said equity in public sector banks can be brought down only at a time when the value is there for the government to do so.
“The stress period is hardly the best time to go to the market. So, let us improve their health and then we will do it,” he said, adding the government is looking at some more cases of consolidation of public sector banks but refused to share details.