'We favour a friendly tax regime'

Rajnath Singh, former Union minister for surface transport and former chief minister of Uttar Pradesh has a big asset  --  his clarity on issues.

Singh is currently the chief of the task force set up by the Bharatiya Janata Party to review the recommendations of the Kelkar committee on tax reforms. In this interview to Ajay Singh, he talks about the point where politics meets economics. Excerpts:

When will you be able to finalise your report on the recommendations of the Kelkar task force for tax reforms?

This report will be finalised and submitted to the BJP president M Venkaiah Naidu and Union Finance Minister Jaswant Singh on January 20.

What are the salient features of your report?

We have decided not to discuss the features of the report with the press. But I can assure you that the committee's report will be the result of a well thought-out exercise and take into account all aspects and it will be unanimous.

But you have already taken a strong position against  imposing income tax on agriculture. Why this opposition?

Unlike other produce, the prices of agricultural produce are not determined by market forces. Farmers hardly get remunerative prices for their produce  --  a situation that has resulted in the large-scale economic privation of the farming community.

All over the country, there are small-scale holdings of land that are uneconomical. We already have a land ceiling act in force. All this makes agriculture an economically unviable proposition. Again, Indian agriculture is dependent on the vagaries of the weather.

In rural India, even minimal infrastructural facilities are not made available to farmers. In such a scenario, it is unthinkable to impose a tax on agriculture income.

How will you justify the agricultural income of non-agriculturalists? This often gives an easy option to tax evaders. And will you agree to the idea of agriculture being declared an industry?

Let there be no confusion about this. Let the government put in place a mechanism to bring to book those evading tax in the name of agriculture.

We are certainly not for tax evasion. Never. But it will be wrong to penalise farmers with small landholdings for the sins of rich people.

And it is not so easy to declare agriculture an industry.

The government has to develop immense infrastructure for agriculture if this sector is to be categorised as an industry. Compared to an industry, the facilities available to farmers are nothing.

You will see that the losses will far exceed the benefits if an administrative mechanism is set up for bringing agriculture under income tax. The realisation of revenue will be minimal while establishment expenses will be gigantic.

You don't need a new administrative mechanism; there is a wide network of village patwaris for realisation of land revenue. Can that network not be converted for tax realisation?

Do you think that the Income Tax department will ever agree to leave the job of tax realisation to village patwaris and block-level staff? This staff is trained for a specific purpose and that is realisation of land revenue.

Are you not in favour of expanding the tax base?

I am all for expanding the tax base. There are many untapped areas that can bring buoyancy to tax realisation. But not agriculture. I am optimistic that the prime minister and the finance minister will agree to it.

Let there be a comprehensive study of the ratio between input and output to find out whether or not farming is economical. If you do a reality check, you will find out that farmers are not getting even the minimum support price for their produce.

Don't you find an incongruity in the fact that the BJP-led government is setting up a committee for tax reforms while the BJP's committee has been opposing its tax proposals? It appears that your committee is guided more by politics than by economics.

It is pure economics that is guiding us to take a certain position on agriculture. There is also no incongruity in the government's approach as the government is free to set up a committee and the BJP is equally free to express its own view as a party. But I must tell you that Kelkar's report is an excellent piece of work.

We may have disagreements on certain issues but that does not undermine the excellent job that Kelkar has done. We have broadly agreed to his suggestion on indirect taxes and toning up the tax administration.

But your committee is putting a spanner in Kelkar's proposals. It appears that while the government is pushing for reforms, the party is derailing it.

This is an absolutely incorrect impression. The reform process is going on and will go ahead full steam. You see, the interaction between this committee with Kelkar and his team of officials was immensely beneficial.

If you look at Kelkar's final report, he has revised his proposal on the national highway development project and retained the cess on petrol and diesel to fund this big infrastructural project.

Can you give readers an idea of your committee's final views on the Kelkar report?

We are in the midst of formulating our final position so I will not go into details. But this much I can tell you with confidence: we are in favour of a tax regime that is assessee-friendly.

A tax payer must feel proud to pay taxes and not be harassed in any way.

This committee is essentially framed within this view and we will certainly live up to expectations.

There is speculation that you will be shifted from the party to the Union cabinet as you are not happy with your new assignment...

I am an organisation man and whatever job I am assigned, I will do it. I am very happy as general secretary of the party.

But you have been marginalised in UP politics...

I have been given UP among nine other states as in-charge of party affairs. It is a wrong assumption that I am marginalised. Obviously, I am confining myself to political management of the party. As a former chief minister of UP, I often urge the government to do whatever is required to be done.

Are you happy with the way UP chief minister Mayawati is performing?

So long as the government runs, it is okay.

Did you wish Mayawati on her birthday? Do you approve of the ostentation she displayed on the occasion?

I did call her up to wish her on the occasion. With regard to celebration, it is a personal matter on which I do not wish to comment.

With elections in certain states around the corner, are you in favour of  "replicating the Gujarat experience"?

We have begun our exercise for elections. Every state will have its own strategy as every state has a political history, social equations and nature of its own.

The success of one state cannot be replicated in other states. I will say that the strategy will be formulated to win the elections and we will take local factors into account.