Impact of GST 2.0 Reforms on Agricultural Input Prices, Farm Profitability, and Rural Development in Mahabubnagar District, Telangana

Abstract

The reforms to the indirect taxation regime under GST 2.0 are a big step in the right direction in India and it will have implications on prices of agricultural inputs, farm profitability and rural economic development. This study aims to analyze the effect of these changes on the farmers and stakeholders of agriculture in Mahabubnagar district, Telangana. In particular, it will examine the price changes of the main factors of agricultural production (fertilizers, pesticides, agricultural machinery, irrigation machinery and services). The study will also examine the extent of transmission of the lower rate of GST to farmers, through the input dealers and the supply chain. The method of the study will be mixed method which will involve primary data collection from the farmers, agricultural input dealers, machinery suppliers and relevant officers and secondary data collection from government reports, price records and GST notification. Quantitative techniques are used in this study to assess the change in input expenditure and farm profitability – percentage analysis, mean comparison, paired analysis and regression analysis. Qualitative interviews will provide insights into awareness, implementation barriers, price transmission and perceptions of stakeholders. The study will show if the implementation of GST 2.0 has lowered the cost of production, helped to increase the net returns of the farmers, promoted agricultural mechanisation and helped to improve rural development. The outcome can support policy makers to more effectively convey tax-benefits and create more holistic fiscal policies for small and marginal farmers.