Train Conversations on GST and Agriculture

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In the last week of November I travelled by Rajdhani Express from Mumbai to Delhi. Of the six travellers five of us chatted as if we had known each other for years.

 

This piece has insights from  conversations with the son of a farmer and two businessmen from Surat.

 

Tukaram is 50ish who spent the first twenty odd years in a village of Maharashtra  seeing his father farm. Although is a government employee today he continues to be closely associated with the family farm. 

 

We spoke about farmer suicides, consumption of fertilizers, price realizations etc. The discussion veered to how did farmers manage earlier?

 

Insights from Tukaram were worthy of reflection. He said:

One, earlier agriculture and livestock farming were intertwined. The remnants from farms were used to feed cattle and cow dung / household waste were used as fertilizers.

 

Thus, a farmer's income from both ensured that the family had enough to eat. This led to stability and overall development of farmers and their locality. 

 

Two, father never purchased seeds. They reserved last year seeds in muddy pots for next year's cultivations.

 

Use of natural products as manure meant that no farmer deaths due to pesticides as we saw recently, lower production cost, better soil fertility amongst others.

 

Three, earlier agricultural land was divided into two parts. Half was used for production for a year. The other was left uncultivated and rejuvenated through natural means for e.g. by adding cow dung.

 

Since needs were less and animal products available to farmers were surplus it was distributed to the more needy sections of society free including farm labour.

 

Four, every farmer had cattle meaning there was adequate supply of manure in the form of cow dung. With dwindling cattle stocks supply of cow dung has fallen drastically.

 

With time things changed.

 

Five, due to increasing demand and needs of farmers they started using tractors, chemical based fertilizers and pesticides. This increased output, production cost but reduced soil fertility. Today land is over-used affecting its fertility adversely.

 

From being self-sufficient, the farmer has to now depend on traders for supply of seeds and fertilisers.  

Six, compared salary increases with price of agricultural produce. He said that around 1977 to 1980 the salary of a government employee was Rs 900/ per month, standard price of staple food grain was Rs 200/ per quintal (100 kgs), and gold Rs 900/ for 10 grams.

 

Today agricultural labour demands Rs 600/ per day as against Rs 15/ in 1980. Monthly salaries of private and government sector employees have gone up to lakhs of rupees.

 

Have agricultural prices grown in the same ratio? asked Tukaram.

 

Without getting into a ratio analysis look at the larger point being made. If today onion prices occasionally shoot up to Rs 80/ a kg, the middle class scream without realizing that the impact as a percentage of monthly budget is insignificant.

 

With a straight face Tukaram said that people have got into the habit of heavy bargaining with farmers and expect low prices of agricultural products.

 

Tukaram ended by saying that today's farmers are caught in a chakravyuh. If there is too much production prices crash. In normal course they get a miniscule of the price the actual consumer pays.

 

Kisan kare tho kya kare! What should he grow? Should he go back to earlier ways of farming or continue with the current system?

 

Thanks to Tukaram time flew. Before we knew reached Surat. Two young confident Gujaratis joined us, say Hardik and Alpesh.

 

It is election time in Gujarat plus read media reports about the business community of Surat protesting against GST.

 

My first question to Hardik, the elder of the two, what do you do?

 

Hardik Bhai told us (Tukaram, Uncle and me) they manufactured sari and salwar accessories.

 

Next question, what is your take on GST? 

Hardik said before GST their entire business was in cash. They only sold to customers in the community and that too after doing rigorous reference checks. After all if the buyer defaulted there was no legal recourse.

 

Alpesh added that earlier their business systems were chaotic. GST has brought some discipline, forced them to introduce systems and adhere to time frames.

 

I asked Hardik how he could sleep at night with large amounts of cash receivables? Isliye tho baal safeed hogaye (that is why my hair turned grey).

 

Alpesh told of a community in Surat who would first win over the manufacturer's trust by paying regularly. This way they would increase credit limit from say Rs 20 lakhs in year one to Rs 75 lakhs in year three. 

 

Then, sometime in year four or five the buyer would vanish, never to be seen again, after having bought goods on credit from the market worth crores.  

Hardik said with GST the possibility of vanishing like that was now remote. Alpesh added  they now insist that every buyer has a GST number and check his ratings on the system too. For a minute Alpesh sounded like a sales representative of GST.

 

What about the income-tax they would have to pay now? In a philosophical tone Hardik replied he wants peace of mind and had no choice.  

Before I could respond Hardik said their biggest problem was not paying tax but finding a good accountant to manage the I.T. based system and file returns. Earlier they got an accountant for Rs 10-15,000/ but post GST the demand for accountants leapfrogged. They are willing to pay Rs 30,000/ per month but are unable to find one.  

 

The compassionate Tukaram gave Hardik numbers of two candidates from his hometown who might be interested. I said to myself, this was a God sent opportunity for an enterprising Gujarati to start coaching classes on GST in Surat.

 

Needling them, I said that most find GST too complicated. In one voice both said it was very difficult to start with but the last round of simplifications and rate reductions had made things easier.

What about the Gujarat elections and the Patidar agitation?

 

Hardik said that the BJP erred in dealing with the agitators. He referred to Patel friends who were very upset with the BJP, not because of the lack of reservations, for police firing on agitators. Therefore, the BJP might win polls but with a lower margin.

When I walked around the bogie found most fellow passengers busy with their smart phones. I was really lucky to meet Tukaram, Hardik and Alpesh.

 

Without passing judgement enjoyed the very insightful and useful conversations. That is the best thing of travelling by train.

 

Indian Railways made it even more enjoyable with good food, excellent service and clean washrooms.

The author is an independent columnist and founder www.esamskriti.com.