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Provincial agri budgets with different priorities

July 01, 2013

WHEN it comes to agriculture, the four provinces have very different priorities as was evident from budget speeches where, except for Khyber Pakhtunkhwa, there was not much mention of the sector.

For the year 2013-14, the Punjab government has allocated Rs92 billion to agriculture out of an estimated budget of Rs871 billion, Sindh has earmarked Rs6.167 billion out of Rs617 billion, KP has Rs2.913 billion out of Rs344 billion budget and Balochistan has Rs7.87 billion out of Rs199 billion.

KP is the only province which, in a bold departure from the past, is taking outstanding steps in improving marketing mechanisms of agricultural commodities. The government intends to reform the outdated system of market committees which have, over the years, become ‘hostage’ in the hands of middlemen, arhtis and commission agents, according to its finance minister.

The agricultural department has been instructed to do away with the system of market committees and, instead, introduce a new system based on joint participation of farmers and private sector. The reason why the peasants don’t get the right price for their produce is the absence of proper planning about the value chain. That is why the KP government has proposed the creation of a Value Chain Management Company which will persuade the average farmer to take interest in modern farm technologies. A certification course is also planned to enable common farmers have access to domestic and international markets.

Since the province does not produce more than 40 per cent of its requirements of agricultural commodities, the PTI government has devised a special strategy to bring under cultivation barren lands by applying modern farm technologies. To begin with, the plans include setting up of fruit orchards on 1800 acres, distribution of 50,000 fruit plants and one lac olive plants. Besides, 300 tonnes of corn hybrid seed and 4,500 tonnes of wheat seeds will be distributed among farmers Balochistan has earmarked Rs4.66 billion for irrigation and Rs4.79 billion for water supply. It has placed more stress on infrastructure development and will spend on road projects, energy schemes, water schemes, local government development, etc.

A special financial aid package would be given to agriculture sector to boost the provincial agricultural economy. The government has, like other provincial governments, put more stress on education ( Rs34.89 billion) and health sector (Rs15.23 billion). As a result of sectoral rebalancing done by the government, it now intends to spend more on social sector and has proposed 89 schemes. These schemes will cost Rs34.5 billion, and the government plans to fund nearly two-thirds of that from the 2013-14 development budget of Rs44 billion.

There is no mention of a tax on agricultural income in the budgets of Sindh, KP and Balochistan. Only Punjab has taken the initiative and set target of Agricultural Income Tax (AIT) for the financial year 2013-14 at Rs2,018.938 million. Last year, it was Rs720.522 million.

According to the budget documents, AIT is a direct tax available to provinces under the AIT Act promulgated in 1997. It seeks payment of fixed amount per acre of land. Major amendments were introduced to this law in 2001 under which holders of 25 acres of irrigated land (equivalent to 50 acre un-irrigated land) were required to submit their AIT returns. This tax is different from the one charged under Income Tax Ordinance on the basis of the actual income earned from farming activities. It is this tax the feudal lobby is resisting.

Punjab and KP are determined to pursue and complete computerisation of land records as early as possible, but Sindh and Balochistan are lagging far behind. The Punjab government, which has set 2014-end as deadline, intends to use the programme as a means to secure property rights of the people in the province. It has already fully computerised the land records of Hafizabad district while the work is continuing on fast pace in other districts.

Of all sub-sectors of the agriculture in Punjab, the biggest share, Rs22.40 billion, has gone to the irrigation system, which is 108 per cent higher than the 2012-13 ADP and 12 per cent of the core annual development plan for the year. The ongoing 15 schemes will get lion’s share and the four new schemes will receive only 10 per cent of the allocation. Besides, Jinnah Barrage and Khanki, Balloki and Sulemanki headworks would be rehabilitated. Five small dams will be built in Attock district and one each in Chakwal, Rawalpindi and Jehlum.

In KP, computerisation of land records and field-based assessment of Agriculture Income Tax, its government says, will be closely monitored to know the true potential of this tax. Besides, the hardships people face due to patwari culture can be reduced or eliminated only through computerisation. The government has plans to computerise the land records initially in Abbottabad, Peshawar, Dera Ismail Khan, Mardan, Charsadda and Nowshera.

The Sindh government will spend its allocated Rs6.167 billion for the development of agriculture sector on 37 schemes of irrigation, livestock and fisheries. Last year, the allocation was Rs5.45 billion. The government has set seven priorities for improvement in the life of people, and agriculture is one of them. Over 60 per cent of the population in the province is actively engaged in agriculture. In Sindh, rice production is 32 per cent, sugarcane 24 per cent, cotton 21 per cent and wheat 12 per cent of the provincial output.One thing common in the budgets of the four provinces is the extraordinarily high allocations for education and health, something overdue for long, and increased spending on infrastructure development to speed up economic activities.

The KP government has imposed no new tax while Sindh has increased property tax from 20 per cent to 25 per cent and the tax ratio on services has also been raised. Critics say that owing to financial constraints, Punjab, the biggest farm goods producer in the country, feels restrained from taking any major initiative to improve farm-to-market roads and storage capacity for wheat and other grains.