Man behind 'Milk Revoultion' compliments FM for reducing duty on milk products
FEBRUARY 28, 2006
By V Kurien
THE Budget 2006-07 announced by the Union Finance Minister Shri P. Chidambaram this morning has come to me as a mixed bag. The focus of the budget is admittedly on pursuing the goals inherent in the National Common Minimum Programme (NCMP) of the UPA Government. Towards this end considerable hike has been announced in the overall allocation under the eight flagship programmes which constitute the key pillars of the NCMP. Total outlay for these eight programmes, namely, (i) Sarva Siksha Abhiyan, (ii) Mid-day Meal Scheme, (iii) National Drinking Water Mission, (iv) Total Sanitation Campaign, (v) National Rural Health Mission, (vi) Integrated Child Development Services, (vii) National Rural Employment Guarantee Scheme and (viii) Jawaharlal Nehru National Urban Renewal Mission has been increased by over 43% from Rs 34,927 crore in 2005-06 to Rs 50,015 crore for the year 2006-07.
One hopes that such a massive increase in Government allocation for rural development and welfare programmes will boost overall demand for goods and services in the economy and will thus incentivise overall growth in the economy provided that there is no leakage of funds in between, which unfortunately has always plagued most of our public spending programmes.
The Finance Minister has rightly hinted that assured irrigation, timely and adequate credit, diversification of the production process and availability of market are some of the prerequisites for a balanced development of the agricultural sector. He appears to have made some announcements for facilitating irrigation and credit flow to the sector. For instance, the outlay under accelerated irrigation programme has been set at a fairly reasonable level of Rs 7,121 crore. Rural credit is proposed to be enhanced from an estimated amount of Rs 1,41,500 crore in 2005-06 to Rs 1,75,000 crore in 2006-07. No significant announcement has however been made for securing diversification of the agricultural production process and for increasing the marketing network for the Indian farmers in general.
In the area of rural credit, it is generally recognized that cooperative banks continue to play a significant role. It is in this context that the Finance Minister's proposal for excluding all such banks except PACS and PCARDBs from the purview of section 80P of the Income Tax Act is a retrograde measure, inasmuch as this means that the District Central Cooperative Banks (DCCBs), the State Cooperative Banks (SCBs) and Urban Cooperative Banks (UCBs) will now have to pay taxes on their profits, if any. Such a measure will weaken the already fragile capital base of the cooperative credit institutions.
I compliment the Finance Minister for exempting condensed milk and ice-cream from excise duty. This will indirectly help the vast mass of small milk producers across the country. In this connection, I would like to suggest that the Finance Minister may consider exempting the income of all cooperatives from tax who are engaged in multi-tier functions of procurement, processing and marketing of agricultural and dairy products. Dairy cooperatives which operate on Anand pattern, envisage provision of support services from the National Federation to the State Federations, from the State Federations to the District Unions and from the District Unions to the village cooperative societies. As such, these cooperatives should appropriately be exempted from the levy of the Service Tax.
I recall with pleasure that Shri Chidambaram in course of his budget speech last year had announced the decision of launching the National Horticulture Mission (NHM) from April 2005. In the previous year's budget speech the Minister had indicated that Anand Pattern of Cooperative (APC) structure would be adopted for implementation of NHM. I however, note with regret that nothing has been spoken about the progress made under this programme so far nor about the actions to be taken in the coming year.
Overall, the budget consists of a number of socially desirable promises, manifestation of honest attempts to redeem some of these promises and unfortunately deep silence about ways and means for achieving the rest of such promises. It is good to be guided by lofty intentions, but it is better to be armed with a workable road map to realize these intentions.
(The views expressed are personal of the author)
