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Editorials/Opinions Analysis For UPSC 20 January 2023

Editorials/Opinions Analysis For UPSC 20 January 2023


  1. India requires a new fertilizer policy  
  2. Increase the Tax Base

India Requires A New Fertilizer Policy


The Niti Aayog has formed a task force to investigate the production and promotion of bio-fertilizers and organic fertilisers.


GS Paper-3: Major crops-cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints.

Mains Question

Why India Needs to Go for Fresh Fertilizer Policy? Discuss Some of the steps undertaken by the government to improve availability of fertilizers.(250 Words)

What issues will be addressed by the new policy?

  • A lower duty on imported phosphoric acid could be proposed to increase the competitiveness of local fertiliser manufacturers, as well as an incentive to promote organic fertilisers.
  • Considering agriculture’s long-term interests and the effects of using inorganic fertilisers, saving a significant amount on subsidy support is a step in the right direction.

The Current Policy’s Impact

  • Increased use of chemical fertilisers: Subsidies have encouraged many farmers to use chemical fertilisers such as urea, which increases productivity but reduces soil fertility in the long run.
  • Excessive and inefficient fertiliser use: According to a UN report, this causes nutrient losses in the environment, as well as the contamination of drinking water and the impact on human lives due to unsafe storage practises.
  • Companies that are technologically inefficient are protected: Technology-inefficient businesses are protected because the subsidy is distributed directly to them.

Farmer Problems in India

  1. Inadequate Water Supply: For a variety of reasons, farmers either do not receive enough water or do not receive it on time; many farmers rely on rainwater for irrigation.
  2. Less Use of Modern Farming Equipment: In most areas, farmers continue to use primitive cultivation methods; traditionally-used ploughs and relevant native accessories are still preferred by farmers.
  3. Overdependence on Traditional Crops: For centuries, Indian farmers have grown rice and wheat in various regions. Excessive production of the two grains frequently causes storage, sale, and shortages of other farm products.
  4. Inadequate Storage Facilities: In rural areas, storage facilities are either insufficient or non-existent. Farmers usually have no choice but to sell their produce as soon as it is ready, at market prices that are frequently very low. They are a long way from earning a legitimate living.
  5. Transportation Issues: A major issue in the Indian agriculture sector is a lack of affordable, efficient transportation; small farmers still rely on bullock carts to transport their produce.
  6. Government Schemes are Yet to Reach Small Farmers: The majority of welfare programmes and subsidies announced by both the central and state governments have yet to reach poor farmers, despite the fact that large/wealthy landlords benefit greatly.

Do you have any idea?

  • Between April and mid-December 2022, total fertiliser consumption was 40.146 million metric tonnes (mmt), with 32.076 mmt produced and 12.839 mmt imported.
    • The Ukraine war nearly doubled the government’s spending on food, fertiliser, and fuel subsidies.
    • For 2023-24, the fertiliser ministry may request a 2.5 trillion subsidy—the outlay for FY23 has already surpassed 2 trillion.
    • Because Russia is a major exporter of liquefied natural gas, a critical input in the production of urea, prices have risen.

The government took the following steps to improve fertiliser availability:

  • The fertiliser department distributed urea and nutrient-based subsidies and implemented direct benefit transfer.
    • It also implemented the ‘One Nation One Fertilizers’ programme, which aims to ensure fertiliser supply on time.
    • By introducing a single brand, this also eliminates the dilemma of selecting from the many brands available.
    • Existing fertiliser retail outlets at the village, block/sub district/taluk, and district levels are being converted into model fertiliser retail outlets.
    • Monthly assessment of state-specific requirements.
    • 100% neem urea coating, which improves nutrient efficiency.
    • Crop yield and soil health monitoring.
    • Online monitoring of fertiliser movement via the integrated Fertilizer Monitoring System.
    • The demand-supply gap was bridged through timely imports.

Why is the fertiliser subsidy increasing?

  • Spent on inefficient urea producers o 24% spent on inefficient urea producers.
    • The greater the firm’s inefficiency, the more subsidies it receives.
    • Diverted to non-agricultural uses and exported o 41% is diverted to non-agricultural uses and exported.
      • The 75% subsidy on agricultural urea creates a significant price differential, feeding a thriving black market that diverts urea to industry and possibly across the border to Bangladesh and Nepal.
    • Consumed by larger, wealthier farmers o 24% is consumed by larger, wealthier farmers.
      • The average additional expenditure is 17%, and in some states—Punjab, Uttar Pradesh, and Tamil Nadu—it ranges between 55% and 70%.


Agriculture employs approximately half of India’s population. To raise the living standards of this population and establish socioeconomic justice, India must implement a new fertiliser policy. The fertiliser industry must become self-sufficient and no longer rely on fertiliser imports. We can avoid the vagaries of high volatility in international prices in this manner.

Increase the Tax Base


  • The Prime Minister has designated the period 2022-2047 as the “Amrit Kaal,” with the goal of transforming India into a developed nation during this time.
  • Significant investments in social infrastructure are required to achieve this goal, and these funds should come from taxpayers rather than borrowing.


GS Paper-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Mains question

The government must broaden the tax base and resist the temptation to overtax certain segments, which frequently results in increased evasion, pushing economic activity underground. Comment (150 words)

Important Highlights

  • India’s tax-to-GDP ratio remains below the critical mark of 15%, which is when a country begins to comfortably obtain resources to make quality expenditures.
  • India’s gross tax to GDP ratio, which was 11% in FY19, fell to 9.9% in FY20, improved marginally to 10.2% in FY21 (due in part to GDP decline), and is expected to be 10.8% in FY22.
  • This is significantly lower than the emerging market economy average of 21% and the OECD average of 34%.

Why is the tax-to-GDP ratio so low?

  • The following are the five most important reasons for the low tax-to-GDP ratio:
    • A sizable informal sector and a high rate of tax evasion.
    • Agriculture is exempt from paying taxes.
    • A poor direct-to-indirect tax ratio of 35:65, compared to the OECD ratio of 67:33 in favour of direct taxes.
    • Low per capita income; o Frequent tax litigation.
  • According to data, the five most common methods of tax evasion in India are:
    • Illegal trade and smuggling.
    • Failing to pay income taxes by concealing income.
    • GST evasion by failing to report or under-invoicing sales.
    • Excise duty evasion through undeclared manufacturing.
    • Abuse of international corporate taxation.
  • According to a FICCI CASCADE report, alcoholic beverages and tobacco are the two most smuggled goods, accounting for 49% of the tax loss from illicit goods.
    • The estimated tax loss from illicit tobacco trade is Rs 13,331 crore, and Rs 15,262 crore for alcoholic beverages.
    • This is what the parallel trade earns at the expense of the nation.
  • Another example is online gaming, where high TDS on gaming income encourages offshore illegal gambling platforms to thrive in India.

Understanding the Tax-to-GDP Ratio

  • Taxes are an important indicator of a country’s development and governance. The tax-to-GDP ratio is used to assess how well a country’s government allocates its economic resources. Higher tax revenues imply that a country can spend more on infrastructure, health, and education—all of which are critical to a country’s economy and people’s long-term prospects. Important information:
    • The tax-to-GDP ratio measures a country’s tax revenue in relation to the size of its economy.
    • This ratio is used in conjunction with other metrics to assess how well a country’s government directs its economic resources through taxation.
    • Developed countries have higher tax-to-GDP ratios than developing countries.
    • Increased tax revenues allow a country to spend more on infrastructure, health, and education—all of which are critical to a country’s economy and people’s long-term prospects.
    • According to the World Bank, tax revenues that exceed 15% of a country’s GDP are critical to economic growth and, ultimately, poverty reduction.

What Does the Data Indicate?

  • According to data from the Finance Ministry, only 1% of Indians pay income tax and declare earnings above the non-taxable threshold.
  • Individual taxpayers filed only 5.78 crore income tax returns for FY2018-19 through February 2020. Only 1.46 crore individual taxpayers filed returns declaring income in excess of 5 lakhs.
  • This does not correspond to the population of cars and two-wheelers in India, none of which can be afforded by people earning less than 5 lakhs per year.
  • According to a report by the State of Tax Justice, India loses approximately 75,000 crore in taxes each year as a result of international corporate tax evasion and private tax evasion.

Government Initiatives:

  • The government has taken some initiatives to broaden the income tax base in India:
    • PAN cross-seeding with bank accounts.
    • The Finance Act 2020-This act allowed individual and cooperative taxpayers to pay taxes at reduced rates if they were unable to obtain any incentive or specified exemption.
    • Use of computer-aided technology-The GOI used Computer Assisted Scrutiny Selection (CASS), Non-filers Monitoring System (NMS), and Income Tax Business Application (ITBA) to identify and punish tax evaders.
    • Lowering Income Tax Rates: The government is attempting to lower income tax rates, thereby lowering the income tax threshold. This step will assist the government in collecting taxes from more people, thereby broadening India’s income tax base.


  • Identifying more tax paying sectors and accelerating compliance are factors that can yield immediate returns.
  • As a result, the government must push for the broadening of taxes, resisting the temptation to further tax the taxed, even if these are wealthy individuals or sin goods, in order to prevent evasion and foster a deeper culture of compliance for the nation’s development.

December 2023