How India’s game-changing tax bypasses the farmer

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That the farmer has historically had one of the most unrewarding and thankless jobs in India is fairly common knowledge. Data sets after data sets show how Indian farmers have remained hopelessly caught between ineffective policy and equally ineffective implementation through the Five-Year-Plans era, through successive governments, and through myriad policy recasts since Independence. The plight of the farmer has changed little even under GST, the new indirect tax regime that aims to revolutionize all kinds of businesses.

Here is one piece of statistics that underlines how GST has so far dealt a raw deal to agriculture, the sector that accounts for half the country’s total employment. Like in the pre-GST era, agriculture continues to be at the receiving end of hazy policies even now. In the new regime, farmers are the only businessmen who can’t claim input tax credit the mechanism that allows a manufacturer/producer to adjust tax liabilities on output (sales) against GST paid on inputs.

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