“Some of the Union government’s fiscal policy measures are proving to be anti-farmer and against the spirit of the cooperative movement,” Manjunath Gowda, Karnataka state Apex bank president has complained, reports the Hindu.
He told reporters that cooperative sector was facing unreasonable taxation, diversion of savings into investments and reduction in support for low interest loans to farmers. These will not only weaken cooperative institutions, but also affect agriculture production that is highly dependent on credit from such institutions.
The Union government is comparing the cooperative sector to commercial banking sector, which is not fair. Cooperative bodies across the countries have send memoranda to Prime Minister Narendra Modi and Union Agriculture Minister Radha Mohan Singh, but the signals were not positive. In fact, the signals are these measures are going to make it even more difficult for the cooperative sector to function, Mr. Gowda said.
From June, all our transactions beyond Rs 10,000 will be tax deducted at source. There is no indication of any respite from the service tax we have been paying. Such measures are unprecedented, Gowda said.
Reserve bank of India directed all cooperative apex banks to invest their statutory liquidity ratio in commercial ventures or government bonds. This means cash available with us for unforeseen circumstances is reduced. This could in fact weaken cooperative institutions, rather than strengthening us, he said. Prime Minister Narendra Modi has promised to stagger this amount over three years. However, there is no assurance on a roll back of this move, he said.
Acting on the union government’s directive, NABARD had cut the amount of refinancing of low interest loans by over Rs 600 crore to Karnataka. This means that on an all India basis, farm credit by cooperatives will be reduced by around Rs 45,000 crore. This will definitely hit farm production, Mr Gowda said.
