Budget 2011: Efficient infrastructure required in agriculture sector; says, ASSOCHAM

According to ASSOCHAM there is an urgent need to invest heavily in building up of a viable and efficient infrastructure in the agriculture sector in India.

By Agencies | Feb 09, 2011, 01.16 PM IST

NEW DELHI: Apex industry body ASSOCHAM has called for an efficient infrastructure in the agriculture sector. In its pre-budget memorandum, it has given the following recommendations for the agro sector:

Weighted deduction for crop development and agricultural extension

Section 35(2AB) of the Act permits a weighted deduction of 200% of expenditure on Scientific Research, in-house Research and Development facility in specified industries. This facility should also be extended to expenditure on agricultural extension and crop development being done by all industries. By this, all companies engaged in extension of services/research will be encouraged to invest in the up-gradation of cultivation/Agricultural practices for improved returns to the farmers.

Section 33A of the Act which permits Development Allowance for Tea plantations should also be extended to Crop Development of other cash crops like coffee, tobacco etc. with a weighted deduction of 150%. By this, those engaged in Crop Development/extension services/research will be encouraged to invest in the up-gradation of cultivation for improving returns to the farmer and enhancing export competitiveness.

Similarly, assistance given to farmers by the Industry towards modernisation of cultivation practices, e.g. Solar Barns, Seedlings, Irrigation Equipment, should be given weighted deduction in the year it is incurred.

Weighted Deduction for Oilseeds Extension Programme

The industry is conscious of the fact that there is need for pro-active approach and enters into Oilseeds Extension Programme to provide to the farmers the necessary agricultural inputs to achieve higher productivity level.

It is suggested that weighted deduction of 200% be granted in computing the taxable income to companies undertaking Oilseeds Extension Programme.

Involvement of private sector in oilseed extension Programme will supplement Government’s efforts and will go a long way in increasing oilseeds production and productivity in the country.

Incentivizing investments in respect of agricultural infrastructure

According to ASSOCHAM to provide boost to the agricultural infrastructure, tax incentives can take the following forms:

• Deduction of proportionate profits for the total value of turnover arising from such computerized infrastructural facilities (in line with the provisions of section 80IA read in conjunction with section 80HHC) for purposes of simplification and avoidance of disputes.

• Deduction of 150% of the total expenditure incurred, both capital and revenue, for creating such infrastructure (similar to the provisions of section 35).

Further, section 80IA of the Act provides for deduction in respect of profits/gains from industrial undertakings engaged in infrastructure development. This covers road, bridge or rail, highway projects, water projects, ports, airports, telecommunication services, industrial parks and power generation. The definition of infrastructure should be extended to include rural infrastructure like:

• Village kiosks housing IT infrastructure like computers, VSATs, Modems, smart cards, projectors, screens etc.

• Support infrastructure like solar-panels, UPS, Batteries etc. at these locations.

• Water harvesting facilities like check dams, wells ponds and other rain harvesting structures.

• Storages including farmer facility center housing training centers, cafeteria, health clinic, pharmacy, bank counters and necessary parking area.

• Green houses and poly houses.

According to ASSOCHAM there is an urgent need to invest heavily in building up of a viable and efficient infrastructure in the agriculture sector in India. This would necessitate building up of proper computerized infrastructural facilities and electronic highways for procurement, dissemination of best agricultural practices, weather information, storage practices etc. as well as offering the best possible price to the farmers. Also, this would result in cutting down intermediaries/middlemen and thereby reduce the transaction costs.

In fact, the Government has recently launched the ambitious Bharat Nirman Program for upgrading the rural infrastructure covering roads, irrigation, drinking water, electricity, housing and telecom. The Government has also mentioned that this is an area with significant scope for public/private partnership. Proper tax incentives need to be provided for ensuring that the private Corporate Sector can also be involved in this gigantic developmental effort.

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