AS Punjab prepares for presenting its budget 2016-17 by the end of this week, the provincial officials concerned are optimistic about sizeable allocations being proposed for priority areas like farm mechanisation, seed development and subsidised credit for small farmers.

Around Rs5bn is expected to be earmarked for development of cotton seed.

Similarly, the provincial government has held a number of meetings with the State Bank of Pakistan and commercial banks to evolve a mechanism where Punjab can pick up the entire mark-up amount for loans to small farmers. Another Rs3bn might go to farm mechanisation.

Market development and building of warehouses would also figure in the budget document. This would be on the top of huge array of programmes (wheat seed replacement, certified seed distribution for vegetables and pulses, and development of Olive Valley in the Pothohar region etc) already under execution.

Apart from these initiatives, Punjab is pressing the federation to abolish the General Sales Tax (GST) on agriculture inputs and also withdraw the Gas Infrastructure Development Cess (GIDC). It is offering to contribute 50pc of tax collection loss from the provincial coffers.

Punjab, which has announced Rs100bn relief package for two years, could afford the money. Out of Rs100bn, Rs10bn would go to the livestock sector and equal amount to irrigation. The province can thus afford up to Rs40bn for agricultural development or relief this year.

Having computerised its land record, Punjab now wants to utilise the system for e-credit

Chief Minister Shahbaz Sharif has been particularly perturbed over the cotton debacle this year. He has formed a number of teams to inquire into the causes and possible pre-emptive measures to escape the disaster in future. Almost all of them stressed the need of certified genuine seed.

Thus, Punjab plans to set aside a huge amount for the seed development. But the crucial question of how to do it is still being debated. Whether the province will go for research and development through its own institutions or private sector or an international player would be invited.

The next big effort will be to boost farm credit. Having computerised its land record, Punjab now wants to utilise the system for e-credit. It wants all commercial banks to extend credit to farmers holding up to a certain ceiling of land, bill the mark-up amount to the provincial government that it would foot. Such moves need a lot of push since banks avoid retailing for smaller farmers and coordination with the State Bank of Pakistan; working out things have not been easy.

Though Punjab is reportedly setting aside over Rs3bn for farm mechanisation, it says that money should not be a problem if the plan takes off. The province could afford as much more if the system can absorb the money. Under the plan, the province wants to subsidise the entire range of implements for farm development. Both service providers and individual farmers could benefit from the scheme and anyone planning to purchase any implement or replace the old one could avail the scheme.

Fertiliser prices are also on the provincial radar in a big way. Punjab hopes that the urea prices would fall close to Rs1,200 per bag if the GST and GIDC are withdrawn. While contributing half of shortfall in federal collection, it also plans to continue with subsidy on phosphatic fertiliser this year. The prices have fallen because of official subsidy. Punjab hopes to make huge dent in fertiliser market along with the federal government and meet the major demand of protesting farmers to keep the cost of production down.

These are some of the major areas where officials claimed to have worked hard and hope to see it reflected in the final budget document for next fiscal year.

Published in Dawn, Business & Finance weekly, June 6th, 2016