Its Time to Recognize Farming as a Business

Often tangled in cahoots of cheaper food supplies and better farm price realization, governments have kept Farming as a Business at abeyance. As a result, farming lost its lucrativeness as a profitable business. The need of the hour is that the government start liberalizing agriculture industry. Let me jot some points to ponder -

Supply concerns, anymore??

India’s population growth rate (not the population) have declined and its currently around 1%. During the 1970s on an average, a woman used to give birth to almost 6 children but now it is 2.1. Over the last 3-4 decades, our average food production growth rate is around 3%. We swapped the deficient tag with food surplus tag. The worry of enough food isn't a challenge now

 

Growth requires liberalization/Deregularization??

India's GDP growth surpassed many, especially those who considered globalization as a threat. Post-1990s when we liberalized Indian economy the results are overwhelming. From an under-developing economy, we are now a leading economic superpower.

In the agriculture-related industry itself, fisheries grew by over 7% in the last 5 years and escaped the demons of regularizations.

Let the business be a business??

Procuring directly from farmers is a tough choice for food processors, given the laws often restrict fair dealing. The food processing in India has grown only by less than 1% CAGR for the last 5 years. With an expected exponential rise in per capita food availability, we need to make it storable or exportable to support the farm prices. MSP alone can't be a solution as it will only aggravate the government debts and taxes.

Farm income a paradox for Tax evasion??

A newspaper report from 2016-

“opposition lawmaker Sharad Yadav told parliament in March. Citizens declared about $29 trillion worth of agricultural income in the year through March 2011. That’s almost 15 times the value of India’s economy. The figure was the result of a Right to Information request by a former tax officer Vijay Sharma, who says the number is probably a computation error and should be closer to 1 percent of GDP or $20 billion. Several requests for clarification from the government have gone unheeded, which pushed him to approach the courts. In the nine years through March 2016, Indians declared $21 billion as agricultural income, according to provisional data from the Revenue Department.”

Not to anybody's surprise, farm income in India has often been a route for money launderers as it doesn't fall in business category at least in taxation.

Farming is a 9000 BC old industry. It was the foundation for the economy and civilization. Over the period, it lost the sheen due to populist attention. Its time for the government to return farming its old glory. They should start thinking of liberalizing agriculture and recognizing Farming as a Business.

Ankit