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Levy of GST, a blow to Agri sector
Badar Virk
The government's decision to impose 17 per cent General Sales
Tax on fertilizers is a deadly blow to already crippled
agriculture sector of the country. With foreign investment
almost dried up and no more investment pouring in, this
ill-advised tax had been up in the air for some time. One had
somehow expected that saner counsel would ultimately prevail
to deter the government from taking this ruinous decision
which will have losting disastrous effects on the crippled
economy.
Other than cash crops of wheat, cotton, rice and sugarcane,
fertilizers are an integral part of all the other crops and
fodder for animals. At least there was a case that provided an
ample scope for arguing with the IMF that levying General
Sales Tax on this essential input for growing crops would have
far-reaching negative, indeed pernicious implications for our
agricultural economy, already being buffeted by prolonged
drought on the one hand and the endemic misfortune of already
meagre resources at the disposal of farmers on the other.
Farmers predicament can be gouged from just one example. The
return on wheat, the staple diet of the people of the
country, during previous two harvests.
I am going to give up farming as it is no more a rewarding
business and the imposition of the GST on fertilizers has
strengthened my point of view that this is a deficit
business, says Mumtaz Ali, who owns ten acres of fertile
land.'I can sell it at the cost of rupees two lakh per acre. I
shall do it urgently and try my fortune
to settle abroad, he concludes.
This just a tip-off the iceberg. There are many more who are
compelled to think on these lines. Agriculture has
already become an expensive business due numerous problems
plaguing it. As it mostly depends on seasonal rains,
occasional and long spells of droughts leave lasting and
negative impact on the input and output of crops. The
world's best canal system, as claimed by us, leaves much to be
desired.
The much-touted and bold government decision to increase wheat
support price to Rs 300 per 40 kg, which raised the hopes of
reasonable recompense for its labour virtually came a cropper
when farmers could not find any buyers willing to pay even Rs240
per 40 kg, except those who were lucky enough to sell it to
the government.
The prices of agri inputs, like others, have sky-rocketed.
Fertilizer dealers shall mint money. The wheat growing season
will start next month and they make matters worse for the
farmers , as they always cause numerous problems for them,
by creating artificial shortage and charging more in
percentage than the imposed GST.
This is an open secret and the government is well-aware of
this disastrous fact that fertilizer usually become a rare
commodity during the peak seasons, thus making life miserable
for those who are, directly or indirectly, attached with the
agricultural sector of this be lighted nation.
To expect this disillusioned tiller, who works so hard yet his
blood and sweat costs not value, to spend an additional 17 per
cent of money to acquire this indispensable input would break
his already strained back. He is, however, not getting the
proper reward for his hard work.
On thing is clear that wheat and all other crops cultivation
will not stop, but fertilizer off take shall drop, and the
cash crop autarky will be threated to an unimagined
proportion. When the high-ups say that increase in
prices will not effect the common man, one becomes demb-founded.
Every each and single increase is directly related to the poor
which further impoverishes the man in street who is forced to
spend more and more on buying staple food items just to keep
his body and soul together.
The government's next cruel decision to increase the diesel
prices has added more fuel to the fire, thus indicating that
it (government) is bent upon breaking the backbone of
country's economy. Furthermore, it is equivalent to
tightening the noose
around the farmers and compelling them to give up their
profession and lead their families and entire farming
community to starvation. People say that government, like its
predecessors, is toeing the line of the IMF, an allegation
denied by the present army government.
Whatever the case may be, International Monetry Fund is known
for its ruthless application of its theoritical principles. It
is the responsibility of the government that it should had
made clear to the IMF that accepting its formula in the case
of fertilizer would nullify the effect of govtis
much-hyped 'poverty alleviation programme'. With WTO
flapping its wings and ready to take more nations into its
lap, our principal exports such as rice and cotton and its
by-products, for instance, would face a stiffer competition in
the international market.
They will have no place to survive what to say of the
competition. What is needed on urgent basis is to take drastic
steps and provide incentives to the farming community. Because
agriculture is the hub of the already teetring national
economy and and the govt should pick up a fig leaf
conventional wisdom and should introduce encouraging measures.
We are already short of meeting the export target set by the
government .One can only wish for the moon that the government
will let the sanity prevail and taking an unprecedented step
to reverse the decision to silent its critics.
The Nation, 10 September, 2001
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