Govt should rally behind distressed farmers not the prospering corporate honchos

A legitimate question that crops up is why should corporate India get away with bank write-offs while farmers are made to undergo jail terms for non-repayment of dues? Why should wilful defaulters be treated with kid gloves while defaulting farmers are jailed?

After the heat generated over the 20 per cent tax imposed on credit card spending abroad, an interesting debate has begun on the social media. A poster tweeted by a prominent business honcho, saying “I am a tax payer. My tax is for development of nation. Not for free distribution,” attracted a lot of traction.

While the government blinked, allowing the 20 per cent tax only if the credit card spending abroad exceeds a limit of Rs 7-lakh, there were interesting and meaningful reactions on the Twitter space.

A Twitterati retorted: “Given that soldiers are standing on the border, why can’t the rich pay a 20 per cent tax on credit card spending.” This was a tongue-in-cheek remark draw from the dominant narrative that prevailed at the time of demonetisation.

The rich have very carefully and relentlessly created a narrative as if the nation’s development is solely dependent on the revenue coming from the taxes the corporate houses pay. While I agree that those who pay a direct tax should be more concerned where their tax money is going, but to give an impression as if the rich only pay tax is wrong. After the GST was introduced, even a poor worker who wears a v-shaped chappal has to pay tax. It is also paid by ordinary citizens for essential items and that includes pre-packaged and labelled milk products, including paneer, curd and butter milk.

This flawed narrative that only the corporate pay tax has to change. As an Oxfam report says, the bottom 50 per cent population India pays two-third of the GST. The top 10 per cent pays only three to four per cent. When I say top 10 per cent, it means people who are earning Rs 25,000 per month, or more.

Well, coming back to the Twitter debate, in my reply, I tweeted: “Yes, my tax should not be used as freebie for corporate,” and the fact that it evoked an overwhelming response, crossing 30,100 views so far, clearly shows that a large chunk of the society is able to grasp how the corporate walk away with huge freebies and that too in the guise of development. Their argument is that we certainly don’t want our taxes for free distribution among them.

Let us first try to ascertain why people are angry that their tax money is going as freebies for corporate India. Like everywhere else, in India corporate not only benefit out of large tax breaks, reduced corporate tax and economic stimulus packages, they also get massive logistic support by way of cheap land, cheap electricity, subsidised bank credit etc. While industry thinks these are incentives for growth, even the Prime Minister had sometimes back, while addressing an ET Summit, acknowledged that what is called as incentive for growth for the industry is also a subsidy.

Besides draining the national exchequer, these freebies have also plundered the natural resource base. It has also created a huge inequality that is worsening every year.

According to a UN study, $ 7.3 trillion worth of natural resources is being handed over on a platter to industries ever year. Withdraw this massive subsidy and the corporate profits will crash. Therefore, while the rich are getting stinking rich, the poor are being driven to the wall. The latest estimates show that globally, the top 0.01 per cent controls the same amount of wealth as the bottom 90 per cent population.

With so much of wealth in their hands, and with tax sops and economic packages strengthening the bottom line, the question that needs to be asked is why should the rich get the benefit of bank write-offs and still lower taxes?

For instance, in India, prior to the pandemic, a tax concession of Rs 1.45-lakh crore every year was announced for the industry in September 2019. This huge tax break came at a time when most economists wanted money to be put in for creating rural demand. What is perhaps little known is that the tax bonanza was in addition to Rs 1.8-lakh crore economic packages that were given at the time of the global economic meltdown in 2009, which means Rs 20-lakh crore has already gone to the rich in all these years. If only this money was put in agriculture, farm distress would have been history.

On the other hand, while the government makes it a point to literally make a splash every quarter when a quarterly tranche of Rs 2,000 is released under the PM KisanNiddhi scheme to farmers, there is no parallel event to celebrate the annual release of Rs 1.45-lakh crore tax sop to the corporate.

By the end of fiscal 2021, Indian banks have written-off a whopping Rs 11.68-lakh crore of corporate bad loans. Interestingly, as of March 2022, the top 50 wilful defaulters owe as much as Rs 92,570-crore to banks. These are people who can pay but do not want to. At the same time, under the insolvency proceedings, news reports say that the top 177 corporate defaulters owed as much as Rs 8.09-lakh crore to creditors till December 2022, of which only Rs 1.51-lakh crore has been realised. Some companies have walked away with cuts exceeding 83 per cent. Similarly, the government announced a Production Linked Incentive (PLI) of Rs 1.97-lakh crore across 14 key sectors. This subsidy, in fact, needs to first go to the acutely distressed farming sector.

Sadly, some business leaders believe that the write-offs are coming from the banks and so therefore do not have a link with tax revenue. What they don’t know, or perhaps they don’t want to acknowledge, is that the shortfall after the banks write-offs is recapitalised by the government, which means it is coming from tax payers’ money. In any case, bank’s resources are also built on public money.

A legitimate question that crops up is why should corporate India get away with bank write-offs while farmers are made to undergo jail terms for non-repayment of dues? Why should wilful defaulters be treated with kid gloves while defaulting farmers are jailed? Still worse, while the defaulting corporate heads continue to have birthday bashes and there is no let down in their opulent lifestyles, it is painful to see farmers throwing onion, tomato, cauliflower, cabbage, potato, brinjal and capsicum on the streets or in nalas because they are not getting the right price for their produce. Farmers are routinely asked to raise production, and when they do it they are left with little option but to throw their produce in frustration. While corporate get hundreds of crores written-off by banks, farmers continue to suffer. The bloodbath on the farm has been happening for quite some time. In addition, we know that the wages of farm workers have remained stagnant for quite some time. These are the dominant unorganised sectors that need immediate support. If agriculture prospers, it will have a domino impact on the rural economy and thereby prop up the national economy.

This is where my tax should go. I don’t want my tax to be distributed as free money to the Richie Rich.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)