Articles by Govind Bhattacharjee

A 2019 Comptroller and Auditor General report has brought out glaring irregularities in the exemptions given to agricultural income for income tax purposes. Exempting large income on agriculture from taxation not only makes the agricultural sector a conduit for money laundering and concealment of black money, but also holds back the much-needed modernisation and reform of the sector. Although everyone agrees on the desirability of taxing agricultural income, successive governments have shied away from it for electoral reasons.

Though the Fourteenth Finance Commission report gives an impression that the special category status given to some states has de facto been abolished, the reality is that the benefi ts enjoyed by these states remain well protected. The biggest flaw of the special category mechanism is that the benefits flow in perpetuity without any accountability or performance monitoring of the states. This has made them overwhelmingly dependent on central funding. It is therefore imperative to bring in more accountability into the mechanism of such liberal transfer of funds and their end use.

The "special category" status accorded to certain states in the Indian Union allowed for much higher per capita central assistance compared to other states to flow unto these states enabling some of them to march ahead and prompting demands from others for this status. But these special category states were backward due to reasons of geography, while for the states which are demanding this status today, issues linked to governance lay at the root of their backwardness. Is it time to revisit the criteria and include others into this exclusive category by excluding those who do not need such assistance any longer?