Introduce VAT on farm produce, says government report
March, 13th 2012
With agriculture share in GDP halving to 15 per cent in the last two decades, a government report card today called for major reforms, from marketing to investment, and new technologies for accelerating farm growth.
The report on 'State of Indian Agriculture 2011-12', tabled in the Lok Sabha said, "Achieving an 8-9 per cent rate of growth in overall gross domestic produce (GDP) may not deliver much in terms of poverty reduction unless agricultural growth accelerates."
Agriculture has to be kept at the centre of any reform agenda or planning process to alleviate poverty and malnutrition, and to ensure food security, the report said.
"Agriculture sector calls for major reforms from marketing to investment and institutional change especially in water management, new technologies, land markets and creation of efficient value chains," the report, prepared by the Agriculture Ministry, said.
Stating that price rise has become a major concern, it said the solution to it lies in increasing productivity, production and in decreasing market imperfections.
"In India, the recent food inflation is largely due to inadequate supply response to increase in demand, aggravated by various other logistic and market related constrains. Inflation affects the poor disproportionately and adversely impacts achievement of removal of poverty," the report said.
The pre-budget document called for introduction of VAT on farm produce in place of varied state taxes, besides stressing on creation of vibrant land lease and credit market.
The report strongly advocated public-private partnership in the farm sector and said that the government needs to raise public investment besides playing a more proactive role to attract private investment.
The report also projected that the average farm growth in the 11th Five Year Plan (2007-2012)is expected to be higher at 3.3-3.5 per cent per year against a target of 4 per cent.
In the 10th Five year Plan (2002-2007) the agricultural growth stood at 2.4 per cent.
Pointing out that non-agriculture sectors are receiving higher investment as compared to the farm sector, the report said there is a need for substantial increase in the investment and favoured investment option instead of providing subsidies for long-term growth.