Although agriculture’s contribution to the national economy has fallen from 53 per cent at the time of Independence to 24 per cent now, it still provides employment to 44 per cent of the labour force.
However its share in the federal budget expenditure of 2003-04 was 1.12 per cent. As a result of this inadequate allocation and mismanagement of agricultural sector last year a disappointing growth rate of 2.4 per cent could be achieved as against the target of 4.2 per cent.
Weather has been blamed as the cause of this low production instead of admitting the inefficiency and mismanagement of the agriculture managers. Again, agriculture has been treated as an orphan in the budget of the year 2004-05 .Of the total budget of Rs903 billion, the share of agriculture is around Rs11 billion as compared to Rs9.17 billion of the last year.
It amounts to nearly 1.22 per cent of the total budget, in spite of the reduced share of 23.3 per cent of the GDP due to negligence of the agriculture sector. This increase of nearly Rs2 billion this year is nullified by the reduction of non-development allocation from Rs7.67 billion to Rs3.95 billion.
This year the allocation for public sector development plan for agriculture in the budget is Rs7.29 billion which comes to 0.8 per cent of the budget . Again ,although the share of agriculture to national GDP was 23.3 per cent, the funding for agricultural research ,education and extension was around 0.3-0.4 per cent of the GDP.
As a result 80-90 per cent of the funds are spent on salaries and maintenance of research and education institutes and hardly 10-20 per cent is left , which is not adequate for any meaningful institutional, faculty and post graduate research.
In view of the importance of agriculture, the National Commission on Agriculture in 1988 recommended the government that the share of agriculture in the national budget should not be less than 1.5 per cent and agriculture must be given a central role in the country,s development strategy.
But even after the lapse of 16 years this recommendation was not implemented by the successive governments. As a result the share of agriculture of 26 per cent to GDP in 1988 has come down to 23.3 per cent in 2003-04.
Due to highly increased cost of inputs, pesticides, electricity, diesel, farm machinery etc since then, the share of agriculture in the budget should not be less than 2.5 per cent in the beginning. Later on it should be adjusted according to the changes in the share of agriculture to GDP in the national economy.
Out of the total budget of Rs.903 billion about Rs .600 billion will be met from local resources, while over Rs. 300 billion will be taken as loan from foreign funding agencies in spite of tall claims of our finance minister of achieving overall growth rate of 6.4 per cent, increase in foreign exchange reserves, paying back significant amount of foreign loans which is still around $35 billion.
Thus on the one hand we are under debt of huge of foreign loans on the other hand we are begging for more foreign loans .As a result the foreign donor agencies dictate us policy decisions and the common man is the ultimate sufferer.
Similar situation prevails in the provincial budgets in spite of significant contribution of agriculture to the Provincial Domestic Products (PDP). For instance, in Balochistan agriculture contributes over 50 per cent to PDP, but its share in the provincial budget is negligible.
Similarly, the share of agriculture in the provincial budget of NWFP is 0.8per cent of the total budget, of Sindh it is 1.1 per cent and in Punjab it is 1.5 per cent of the total budget.
Thus agriculture sector has again been treated as an orphan in the Federal and provincial budgets. General Pervez Musharraf unfolded a package of incentives for the farmers by bringing Zarai Taraqiati Bank (ZTB) interest rate on agricultural loans from 14 to 9 per cent.
It is a good incentive, but it is still higher than 4-6 per cent interest charged by the commercial banks from the industrial units. He also announced that agricultural loans will be raised to Rs80 billion and in addition to ZTB the commercial banks will also be encouraged to give agricultural loans, but they should not charge more than 4-6 per cent interest on agricultural loans to the farmers as charged by them from industrial units. Agriculture should be treated at par with industry as it supports directly and indirectly to the major industries.
The agricultural credit given by the Agricultural Bank of Pakistan (ADP) and commercial banks increased from Rs12930 million to Rs51704 million during the decade ending in 2002-03.
Out of this actual production loan on seed, fertilizer, pesticides. tube-wells, drought cattle, tractors and farm machinery etc ranged from Rs11360 million to Rs43476 million. The rest was spent on livestock, poultry, fisheries ect.
Hence the loan per cropped hectare ranged from Rs519 in 1993-94 to Rs1985 in 2002-03 or increased from Rs310 per acre in 1993-94 to Rs804 per acre in2002-03. This was not sufficient to meet the per cropped acre cost due to increasingly high cost of quality seed, fertilizer, pesticides, electricity and diesel for tube wells and high cost of farm machinery and taxes on agriculture.
Thus, this increase of agricultural loan from Rs57 billion in 2002-03 to Rs80 billion in 2004-05 will provide only nominal relief to the farming community, especially the small, subsistent and below subsistent level farmers having 63 per cent of the total farm land in the country.
Therefore, the government must ensure that nearly 60 per cent of the agricultural loan is given to the aforementioned categories of small farmers and the rest to the medium and large farmers who own 39 per cent of the total farms.
Again, the influential politicians and feudal lords take major part of the loans against the names of their tenants showing them as small farmers thus most of actual credit does not go to many genuine small farmers and landless tenants. The tragedy is that most of these politically influentials also get their loans finally written off.
In view of these harsh realities the government should ensure that nearly 60 per cent of their announced agricultural loan goes to the small farm categories, besides facilitating the procedural requirements for taking these loans by the common farmers.
The other part of the package was reduction of price of DAP fertilizer by Rs100 per bag of 50 kg, the price of which was higher than Rs765 per bag. The reduction of price by Rs100 per bag will have insignificant impact on DAP use.
Because to get higher yields of crops a balanced use of nitrogen, DAP and potash is a must, but no relief in the package was announced on the use of urea for nitrogen and sulphate of potash for potash requirements.
The cost of urea increased from Rs210 to Rs411 per bag of 50 kg during the decade ending in 2003 and that of sulphate of potash increased from Rs195 to Rs780 per bag during this period.
Again, no relief has been provided in case of high cost of pesticides. Permission for the import of tractors below 35 horse-power to above 100 horse-power is to be given without general sale tax or withholding tax and reducing import duty to 10 per cent only.
These tractors can only be used by big landlords and the small ones will not be able to reap any meaningful benefit from these tractors. The policy makers should have developed a policy to import Chinese made 12 horse-power two wheel diesel tractor that commands 12 hectare and is more suitable to the small farmers.
It prepares the soil and sowing of a crop in one operation. It allows timely sowing of wheat in rice fields thus increasing yield of wheat in rice wheat belt. It is now extensively used by small farmers in the Southeast Asia including Nepal, Bangladesh and on large areas of Indogangetic plains of India .It reflects on lack of knowledge of the agriculture managers for the guidance of the President.
The package also includes Rs66 billion for the improvement of water courses understandably including laser land levelling for increasing irrigation efficiency. The package should also include monitoring and evaluation of the on-going work of watercourse improvement to avoid substandard work due to high corruption in the concerned departments.
Moreover, maintenance of post-watercourse-improvement period is very essential. Otherwise all the money spent on the improvement of over 134000 watercourses in the country will go waste and the nation cannot afford to spend money on their improvement again and again.
The participatory irrigation management is considered as one of the effective farmer-friendly system and has been followed successfully in several countries of the world. The main objective of this system is to organize, encourage, mobilize and legally empower farmers associations to take charge and manage irrigation system at the distributary level.
Contributions made by the farmers associations of a distributary command area to be used for maintenance of water courses after their improvement by the government would have saved a major part of the burden on the annual budget for further watercourses improvement and their subsequent maintenance.
Similar plans were prepared in the National Drainage Programme (NDP) during the past several years but they did not succeed as the powerful bureaucracy did not want any change in their provincial irrigation departments.
This resulted in the performance of NDP much below than its projected planned programme. One wonders then what was the point of over-burdening the nation with a foreign loan of US $ 785 million for NDP.
Unfortunately, to prepare a foreign loan-oriented budget and project their wonderful performance during the previous year has become a routine of successive governments. Eight five-year plans were based on foreign loans.
With the exception of the Second Five-year plan (due to green revolution in agriculture) none of these plans did achieve their targets and maintain the agriculture revolution.
The nation was thus continued to be over-burdened with foreign debts. Our finance wizards should have told the nation how much money is spent on the push palaces, secretariats, staff and expensive cars of our rulers and their so frequent visits to foreign countries along with a horde of staff causing unnecessary burden on the nation.
Curtesy: The Dawn