Co-operatives should be tax-exempt: Kurien

who is considered as the father of the white revolution in the country, has termed the Budget presented by FM P Chidambaram as 'a clever Budget'.

Kurien stated that the finance minister has given relaxation to the industry but has also made provisions for the adequate revenue generation for the government. Speaking to Business Standard, Kurien, however, expressed concern over the tax structure for co-operatives. Excerpts

What are your general observations about the Budget?

It is a clever Budget. Also, it is a good Budget in more ways than one. The FM has proposed several exemptions but he has also managed to raise the revenue.

The Budget has a number of proposals for rural development.

Yes. In a bid to ensure effective implementation of the "Bharat Nirman" project mentioned in the President's address in the current session of the Parliament, allocations have been made separately for each of the six areas covered by this project, described by the minister as a business plan for improving the rural infrastructure.

The project covers the areas of irrigation, roads, water supply, housing, electricity and telecom connectivity. In this connection, I feel that clear modalities need to be evolved for effective implementation of these proposals.

What were your expectations from the Budget which were not addressed adequately?

What is the purpose in taxing the co-operatives? The co-operatives should also have been given relaxation just like the reduction in corporate tax.

Dairy co-operatives operating on Anand pattern envisage provision of support services from the national federation to the state federations, from the state federations to the district unions and from the district unions to the village co-operative societies.

The co-operatives are being taxed at every level. In turn, the central government offers grants and subsidies for co-operatives, which makes little sense.

How would have the reduction in taxes help the co-operatives?

There are a number of countries where co-operatives are not taxed at all. Why the co-operatives should be taxed if the government wants to develop them? The non-existence of tax would encourage capital formation in the sector.

There was a necessity to exempt the income of all cooperatives who are engaged in multi-tier functions of procurement, processing and marketing of agricultural and dairy products.

Do you welcome the move for more regulation in co-operatives in view of failure of bank co-operatives?

The state interference in co-operatives will invite the death of co-operative sector. Those co-operative institutions which do function improperly or are mismanaged, should be punished.

More importantly, co-operatives must be freed from the control of politicians who have vested interest.

Are you satisfied with the Budget?

The finance minister wears a south Indian dhoti like the farmers do, but he needs to initiate steps to help the agriculture sector grow at a faster pace. And while everybody talks of allocations, no one is paying attention to the administrative cost of governments.

The bureaucracy is more of a burden. A reduction in number of bureaucrats by one third will set the stage for good governance.

Also, the increase in excise duty on molasses from Rs 500 per metric tonne to Rs 1,000 per metric tonne should have not been effected. Molasses are used as raw material for cattle feed.