Tax laws

Deciphering the changes made to the laws on direct taxation

Following the deadlock over the Farm Bills that led to their withdrawal, Finance Minister Nirmala Sitharaman was expected to make a host of new proposals in the Union budget to win them back. In fact, the budget makes it clear that the government is keen on fixing the structural problems in agriculture (which the farm bills were supposed to fix) rather than doling out short-term palliatives. In many respects, the EU budget for 2022 scores points on several fronts, particularly in the area of ​​capital expenditure, which has increased by 35.4%. This should stimulate business investment and also generate more jobs. There is a realization that agritech must be the engine that propels these structural changes, leading to agricultural prosperity. A roadmap has been proposed to increase rural infrastructure and connectivity to help farmers get to market faster. This has a direct impact on the prices realized by the farmer, especially for perishable goods.

In the 2022 Union budget, several measures were announced that integrate technology into the agricultural sector – a much-needed intervention for improving productivity. The Finance Minister’s push for a PPP model through the involvement of new generation players should be seen in this context. The massive use of drones is an example. The government has maintained its commitment to the MSP scheme by earmarking a whopping Rs 2.37 lakh crore to purchase 120.8 million metric tons of wheat and paddy from 16.3 million farmers through direct payment into their accounts. This is a huge step that should appease farmers who had doubts about the continuity of the supply mechanism.

In the economic study tabled in Parliament last month, it was pointed out that the pandemic had the least impact on the agricultural sector, which is expected to see robust growth of 3.9% in 2021-22, compared to 3, 6% the previous year. . The survey also focuses on the direct correlation between capital investment in agriculture and its growth rate and, therefore, emphasizes increased public and private investment in the sector. True to the objectives of the survey, the government decided to launch a fund with mixed capital, raised under the co-investment model through NABARD. This should finance start-ups for agriculture. Those who will come under this scope will be the farmer-producer organizations and those who will offer machines to farmers for hire. Apart from this, linking of bank and postal accounts, monetary support to promote agroforestry, as well as an allocation of Rs 45,000 crore for the promotion of scientific organic farming in the north eastern states are welcome measures.

There are other measures that the agriculture sector stands to benefit from, including promoting the use of Kisan drones for crop assessment, nutrient application, chemical spraying, all resulting in water savings. and crop protection. Through various incentive schemes, he has purchased agricultural drones, which cost around Rs 8-10 lakh, almost free for major agricultural research and training institutes. Of course, field monitoring of the effectiveness of these measures is essential to take full advantage of them.

It is also important for the government to focus on livestock and animal husbandry, which contribute about 25% of agricultural GDP, mainly by small farmers. The government has been successful in encouraging shrimp aquaculture by reducing duties on some inputs to promote its exports, which will create more jobs. There are other progressive measures in the budget that need to be highlighted. In particular, measures to promote organic farming with a focus on farmers’ land in the 5 km wide corridors along the Ganges are being initiated.

The government is finally, rather quickly pushing the KenBetwa River Link project with an allocation of Rs 44,000 crore, which is expected to benefit 900,000 farmers. The project plans to transfer water from the Ken River to the Betwa River, two tributaries of the Yamuna. According to the Jal Shakti Ministry, the project is expected to provide annual irrigation of 1.06 million hectares, supply drinking water to around 6 million people and generate more than 100 MW of hydroelectric power and 27 MW of power. solar.

The government should also be commended for increasing the allowance for Rashtriya Krishi Vikas Yojana almost five times to Rs 10,433 crore, which will enable states to increase agricultural productivity. This scheme has been revived and is perhaps one of the strengths of the Union budget. The new Ministry of Cooperation has also opened its account with the budget allocating Rs 900 crore to digitize about 63,000 primary agricultural cooperative societies. It will also provide financial support and offer technology to help them become economically viable entities. There was a 25% cut in the allocation to the Mahatma Gandhi National Rural Employment Guarantee Act to around Rs 73,000 crore. It is fair to assume that the resumption of normal economic activity in the country will reduce the need for labor to fall back on guarantee schemes. However, if the need arises, the government will make additional funds available to vulnerable sections of society.

The only area of ​​disappointment is the inadequate attention and allocation to agricultural R&D. There hasn’t been a breakthrough for many years, and unless that happens, farmers will continue to demand allowances. The government should partner with the private sector and support it financially for cutting-edge research, because improving productivity is the way forward.