Govt can look at taxing rich farmers, says MPC member Ashima Goyal

Having taken care of poor farmers by transferring funds into their accounts, the government can contemplate imposing income tax on rich farmers to bring about fairness in the taxation structure, Reserve Bank Monetary Policy Committee (MPC) member Ashima Goyal has said.

Finance Minister Nirmala Sitharaman will present the interim Budget on February 1 in the Lok Sabha.

"Government transfer payments to farmers are like a negative income tax. Along with that, a positive income tax can be applied for rich farmers as part of a movement to a data-rich system with low tax-rates and minimum exemptions," Goyal told PTI.

She was responding to a query on whether agriculture income should be taxed in India.

Asked if coalition governments or single-party regimes produced better economic growth rates, the eminent economist said growth rates depend on many things, but in judging a government it is also necessary to see what growth rate they inherited and what they left the country with.

"Coalition governments have to work towards creating a consensus, which is a good thing.'' she said.

"But they tend to favour policies that deliver short-run rewards for their constituents, which hurt growth in the long-run," she said.

Goyal noted that a single-party government can carry out measures that enable sustainable long-run growth but it must be open to constructive criticism and feedback from different groups in order to avoid taking wrong decisions.

India has a good mix of a vibrant private sector as well as enabling government initiatives, she said.

"It (India) can get rich before it gets old if productivity raising innovation is stimulated," she said, adding that this requires well-designed government facilitation of private freedoms and capabilities, safeguarded with intelligent regulation.