Budget 2019-20 announced that 10,000 new Farmer Producer Organisations (FPOs) would be formed in the next five years. A year earlier, Budget 2018-19 had made a provision for tax holiday for FPOs for five years, a period that is about to end. The tax holiday should be extended so that the FPOs created later also continue to benefit from the tax exemption. This is what Yogesh Dwivedi, CEO, Madhya Bharat Consortium of Farmers Producer Company Ltd, said.
MAT be abolished
Dwivedi said that in spite of tax holiday for FPOs with turnover up to Rs 100 crore per annum, they had to pay an 18 per cent Minimum Alternate Tax (MAT). This should be abolished as it leads to much trouble for these organizations of small farmers. Dwivedi said that in case the government did not want to abolish it fully, it could fix a turnover limit below which FPOs might be exempted from MAT.
Scrutiny before registration
According to Dwivedi, FPOs should be scrutinized before they are registered. The objective of forming FPOs was to help small farmers. The concept was that small farmers who produced more than their own needs should find a convenient way to sell their produce in the market. But what is happening is that members of the same business family come together and form an FPO. Currently, the rule provides for one FPO in each block. Corporates, too, have been assigned the responsibility of forming FPOs at some of the places. This needs to be checked.
Banks demand two years’ balance sheet
The government has made a provision that it would guarantee FPO loans, but banks do not get satisfied with this, says Dwivedi. They demand from the FPOs balance sheet for at least two years. Such a demand simply rules out the possibility of loans to new FPOs. Dwivedi said that FPOs should be kept in the priority sector in terms of credit.
Rebate for FPOs in mandi tax
Dwivedi sought rebates for FPOs in mandi tax. He said that the government might not exempt the FPOs from the tax fully, but some rebates would be in order. Only then can organizations of small farmers withstand competition from big businessmen. Dwivedi said that more natural risk was involved in agriculture. So, it needs to be facilitated more in comparison to industry. If this does not happen, nobody will be interested in investing in agriculture.