KARACHI, Aug 20: “The continued political dominance of large land owners combined with social fragmentation have kept much of Pakistan relatively backward both socially and economically,” says a World Bank report.

Highlighting the problems facing modernization of agriculture, the World Bank Pakistan Country Assistance Strategy (CAS) report says that concentration of landownership and share tenancy have contributed to massive rural poverty and low farm yields.

In a coordinated effort, the IMF has also expressed its disappointment over the poor collection of agricultural income tax in the outgoing fiscal.

Quoting Agricultural Census 1990, the World Bank report points out that 2.5 per cent of big farmers own over one-third of the country’s total farm area (34 per cent). Their contribution to income tax is nominal.

A highly skewed pattern of distribution of land contributes to poverty and vulnerability of a large number of rural households. Rural poverty incidence is the highest and the most severe among the landless (who represent 50 per cent of the rural population) and falls steadily as ownership of land increases. Close to 75 per cent of Pakistan’s poor are landless and constitute 70 per cent of the rural poor.

The CAS report says: “Inequity in landownership explains why overall agricultural yields in Pakistan remain below those of other countries with similar resource endowment. There is evidence from developing countries, including Pakistan, that as farm size increases, productivity falls.”

In yet another report, the IMF has expressed its disappointment over the poor collection of agricultural income tax and reminded the government that planned fiscal adjustment would require “strong political willingness to enforce tax collection”.

The report points out that “the disappointing performance of the agriculture underscores that the authorities need to move beyond legal and regulatory reform to “forceful implementation at the field level.”

Barring the drought conditions, the income tax collection from agriculture in Punjab is normally a mere 11 per cent of the total provincial tax revenue, say provincial officials.

The income tax target for current and outgoing year had been fixed at Rs700 million for Sindh, though the collection is stated to have fallen below revised target of Rs550 million reset last year owing to drought. Officials admit leakages that need to be plugged.

This year, officials in Sindh expect an increase as they intend to bring under tax net all landowners whose income exceeds Rs80,000. NWFP’s target for 2002-03 has been set at Rs55 million, according to press reports.

Though agriculture contributes about a quarter of GDP, its contribution to income tax revenues is dismally low.

The CAS report also points out that the form of tenure of land can have significant impact on productivity, the incomes of tenants and investment incentives.

And share-tenants are likely to be less productive than owner or fixed rent tenants, since any productivity gains must be shared with the landlord. Also the prevalence of share tenancy, especially in Sindh, reduces the incentives in land improvement and resource conservation.

Since sharecropping is less productive, share-tenancy has declined. The share-cropped area countrywide dropped by 50 per cent from 46 to 21 during 1960-1990, whereas the land tenancy under fixed lease rental doubled from four to eight per cent. In the same period, the owner-operated farm area doubled from 30 per cent to 61 per cent. In 1960, the landless tenants farmed 47 per cent of the total farm area but their share declined to 18 per cent in 1990.