Monday, May 9, 2011

Blunder on Land Revenue Income

Blunder on Land Revenue Income


IT is a decision which has gone without much notice and analysis probably because very few people have time and priority to scrutinise the budget papers in depth. There was no political will to take up this issue but the government was concerned about mounting public debt, audit objections and juridical intervention.
Goa despite being a miniscule state has moved agonisingly slowly on land reforms. Not even a hundredth part of the voluminous Land Revenue Code, 1968 has been implemented by the revenue department. Goa is the only state in India which doesn’t collect land revenue. This has emboldened people to neglect their fertile lands. Farmers are expecting windfall income from land conversion.
Fortunately all this would change from April 1, 2010. People who own land would have to pay the land revenue every year. Since ancient times, land revenue has been the main source of income for the state in India.
In my note submitted to the government in February 2008, I had mentioned, “The collection of land revenue and the existence of the institutions of the state have been co-terminus. A historical analysis of ancient Indian policy suggests that tax on land played a pivotal part in the evolution and maintenance of the systems of governance.
In ancient times, land revenue was possibly the only source from which the entire income of the government was derived.
Further, its incidence was on a large section of the population as a major proportion of the people relied on land for their livelihood and existence. Thus, tax on land proved to be the primary source of the state’s wealth. The revenue collected varied from region to region and also depended upon the regimes. Broadly speaking it was a share of the produce paid in kind or cash.”
Again on July 27 and August 3 2009, I wrote two articles in this column– “Goa-the only state to forego land revenue income.” But there was no response from the government. How this administrative lethargy and indifference can be explained?
Loss of Revenue
It took the state government a record 20 years after enacting Land Revenue Code, 1968 to fix the rates under Assessment and Settlement of Land Revenue of Agricultural Lands Rules, 1969 notified in March 1971. The lands are divided in zones and groups. Non-collection of land revenue left a huge gap in government income and the public debt increased to Rs 5623 crore at the end of March 2009. Suddenly this year, the government woke up on this issue and its’ newly found wisdom is reflected in the budget. But it has come with a price, a very heavy price.
Sometimes, the government becomes overgenerous to mask its’ own administrative lethargy and failure. Sometimes people get boons and booties without actually asking for them. Only in Goa such miracles can happen. The largest package of unproductive subsidy in history of Goa, benefiting thousands of land holders who owe something to the government as land revenue was recently announced by the Chief Minister who also holds the finance portfolio. In just one stroke the finance minister waived off arrears of land revenue since 1988. The amount is estimated at Rs 1000 crore. This is 18 per cent of Goa’s public debt.
No investigation has been launched in the reasons for failure of the government to collect the land revenue since 1988. Then how suddenly government discovered this route of revenue collection under the tax proposals?
In the budget speech the finance minister said, “One of the important areas of concern for the state has been the non-compliance of land revenue despite the legislation in place. The state has been losing substantial revenue of approximately Rs 40 to 50 crore, every year on this count. It has also resulted in the fall of share of agricultural output to the total output of the state.
Bad Finance Management
In order to revive agriculture activities in the state, I propose strict implementation of the Land Revenue Code and collection of the land revenue. I also propose to waive the arrears on this account up to March 31, 2010 and increase the existing rate by 100 per cent with effect from April 1.” Further the budget speech says, “I propose to levy a higher rate of land revenue on all such agricultural lands which are not being tilled and kept fallow. The rate shall be 200 per cent higher than the present for land revenue.” This is soft governance.
Actually section 36 of the Agricultural Tenancy Act has clearly stipulated the process for assuming the management by the government of all uncultivated agricultural lands. But each and every political party which has ruled Goa, and all the previous agriculture and revenue ministers had taken the care to suppress this clause and maintain ‘status quo’ thereby encouraging gross indiscipline and chaos in agricultural sector. The CM has surrendered Rs 1000 crore of arrears of land revenue. Indirectly, he has acknowledged, without fixing any responsibilities, that this is nothing but a clear example of bad governance and bad public finance management.
Since 1996, I have been drawing attention of the government to this massive loss of revenue. I did not meet a single serious revenue officer who could take initiative to brief their political masters. Even the civil service officers who otherwise would promptly handle the cases of revenue arrears in their postings in other states were not interested in pursuing this matter in Goa.
This issue has been also figuring in the legislative assembly since 1995-6. Estimates of receipts for the year 2010-11 shows that Collectorate, North Goa under budget subhead 0029-101-01, Land Revenue Tax, would collect only a token Rs 5 lakhs during 2010-11.
Under the same subhead the South Goa Collectorate would collect only Rs two lakhs. The collectors themselves have forgotten that the original meaning of the word-collector is to ‘collect the land revenue’. The finance minister estimates income of Rs 40 to 50 crore every year. By surrendering land revenue income, our politicians and revenue officers have encouraged people to neglect their fertile and productive lands.
Land is now at premium price in Goa. Land speculation has been abnormally increasing the quantum of bank deposits in Goa. The rate of growth of bank deposits is not proportional to growth of GSDP and the economy. The government would not be able to collect any land revenue till April 2011 because of the waiver. This is loss of another Rs 50 crore. But that’s the way governments in Goa have functioned. Waiving off Rs 1000 crore in arrears of land revenue is a Himalayan blunder. Considering Goa’s mounting public debt, isn’t it necessary that civil society, business and industry have a serious public debate on this whole issue?

No comments:

Post a Comment