How Agriculture May Miss Out On CSR Funds

A recent news report based on income of Indian farmers will shock you with its startling figures. These figures can negatively affect the CSR funding towards the plight of poor Indian farmers. In a written RTI reply to News Nation, in 2011-12 nearly 6.50 lakh farmers earned Rs 2 thousand lakh crore (approx) which was much more than the annual GDP of the entire country. It is important to note that agricultural income is non-taxable in India. In 2010-11, India’s total GDP was Rs 78,77,947 crore which included agricultural income of Rs 1,319 crore but the farmers during the same year made an annual return of Rs 2 thousand lakh crore (approx) which is next to impossible.

Agriculture is one of the oldest and significant contributor towards employment and also towards India’s GDP. Roughly 50% of Indian population is associated with farming and 60.6% of land in India is under agriculture as per estimates of the World Bank. On the other hand the data compiled by the National Crime Records Bureau, suicide cases in the self employed category accounted for 38.7% of victims of which 11.4% of victims were engaged in farming and agriculture activities.

According to Department of Agriculture, the government for the year 2011-12 gave out a total of Rs 5,11,029 crore worth of credit to the farming sector, whereas the target was  Rs 4,75,000 crore.  A sector where farmers are committing suicide due to lack of income also sees revenue far exceeding the country’s GDP creating a mystifying picture.

Schedule VII of the Companies Act, 2013 lays down activities that fall under the umbrella of CSR. Agro forestry, rural development projects and maintaining quality of soil, air and water are a part of the list. Companies are working towards upliftment of farmers using their CSR funds.

But such statistics can de-motivate CSR funds to be pumped in for farmers assuming no actual need in the sector. While a lot needs to be done for the plight of farmers, there needs to be transparency and accuracy in assessment of actual details to get a clear picture of the scenario and genuine tax payments.

Agricultural income being non-taxable in India, chances of money laundering go high in the sector. According to reports, an internal letter dated March 10 of the Central Board of Direct Taxes (CBDT) has asked its officials to verify the genuineness of agricultural income claims exceeding Rs 1 crore made by taxpayers in their income-tax (I-T) returns.

The move was taken after it was noted in a Public Interest Litigation (PIL) filed in Patna HC that over the years several taxpayers have declared significant agricultural income; especially when agricultural income is exempt from tax. The CBDT also noted that the agricultural income is often used as a conduit for money laundering.

With this report, the plight of Indian farmers seems to have two extreme facets. On one side, we have people using the farming sector to evade taxes and on the other side unable to pay loans of amounts of Rs 10,000, farmers are committing suicides.