EDITORIAL: Prime Minister Shehbaz Sharif has announced a 600 billion-rupee relief package for the agriculture sector envisaging: (i) mark-up write-off of loans acquired by the small farmers that would cost the exchequer 10.6 billion rupees.
Small farmers were not defined; however, this measure is unlikely to benefit the subsistence level farmers as they are forced to borrow from loan sharks, given that the banking sector does not extend loans to them due to lack of collateral; additionally, 5 billion rupees has been earmarked for payment of mark-up on loans to landless farmers though, again, it is unclear what the haris (peasants) would use as collateral; (ii) 50 billion rupees has been earmarked as loans to youth seeking employment in rural areas, which would cost the government 6.40 billion rupees as mark-up.
This presupposes that our youth would proactively seek employment in rural areas while demographics suggest that there is a steady outflow of youth from rural to urban areas in search of jobs; besides, the government’s assumption that all those who seek loans will make a success of their investment is a policy that has persistently failed in the past; (iii) DAP fertiliser price will be reduced from 14,000 to 11,250 – the reduction agreed with industry would provide a relief of 58 billion rupees though untenably it is not envisaged to be paid by the government; (iv) 13.2 billion rupees payable for certified seeds with equal cost sharing with the farmers – again a measure whose beneficiaries maybe the rich farmers; and (v) the remaining incentives would be through duty reduction and include import of second-hand tractors, CKD duty for new entrants and import of urea – measures that would reduce the already severely compromised fiscal space that in turn would have dire consequences during the forthcoming ninth review of the International Monetary Fund (IMF).
There will be no cost of these measures, so opined Finance Minister Ishaq Dar, as 400 billion rupees is not a revenue item but loans to be provided by banks while the remaining amount of 200 billion rupees is already budgeted and funded no doubt by his predecessor Dr Miftah Ismail. While the measures announced do not total 600 billion rupees yet the logic employed by Dar is reminiscent of agriculture policy announcements by previous governments whose implementation did not come close to their objectives either in terms of actual outlay or in terms of the associated benefits.
And the incumbent finance minister’s logic brings to mind the 120 billion-rupee package in 2020 whose architect Dr Hafeez Sheikh claimed that it would tackle the negative fallout of Covid-19 on the general public with the bulk of the amount already budgeted though the then government did raise disbursements under the Benazir Income Support Programme, a policy similar to the significant disbursements for the flood victims.
Such large relief packages especially during an ongoing International Monetary Fund (IMF) programme tend to suffer from even more implementation bottlenecks than are the norm in this country and one would not hesitate to state that the 600 billion-rupee package is a non-starter – not only because government pledged support will be contingent on IMF approval, which is unlikely, given the appalling state of the economy today but also because commercial banks are unlikely to extend loans to those most in need due to lack of requisite collateral. Coming up with the same policies that have strengthened the elite capture in this country and not paid dividends in terms of tackling poverty is hardly likely to win political points with a much better informed public than five years ago when the Pakistan Muslim League-Nawaz (PML-N) in power.
What is further concerning is the recent World Bank report that concludes that the rich farmers are also operating well below yields even in well irrigated and fertile soils of the Indus irrigation system when compared to production levels in similar regions and global farming systems. And additionally the report mentions that vast bulk of the fresh produce passes through traditional marketing systems onto consumers – a system of aarthis (middlemen) that needs urgent remedial measures which would have a much greater beneficial impact on the general public and the poor farmers than the relief package announced by the Prime Minister. How ironic it is that the question why our big farmers or those who still own huge swathes of land do not want to invest in food innovation and agriculture technology has no easy answer even in year 2022.
Copyright Business Recorder, 2022
Comments
Comments are closed.