In a much-anticipated move, the Balochistan government has announced plans to set up a provincial bank, and set aside Rs10 billion for this purpose in its FY18 budget, unveiled on June 15.
The establishment of the Balochistan Bank, on the pattern of Sindh Bank and Punjab Bank, in the next fiscal year, should help local farmers have greater access to formal finance.
Advisor to Balochistan Chief Minister on Finance Aslam Bizenjo said in his budget speech that Rs8bn have been allocated for the agriculture sector for FY18. This is slightly higher than Rs7.4bn allocated in FY17.
Growers lobby groups in Balochistan were expecting the announcement about the creation of a provincial bank in the backdrop of their history of lack of access to formal finance.
Banks meet only a fraction of agricultural lending targets in Balochistan (less than 7pc as of FY16) that keeps the province’s total share in farm loans at below 1pc of the total.
Whereas the SBP is considering assigning district-wise lending targets to banks to ensure judicious distribution of loans across Pakistan, it has also encouraged the provincial government to establish the Balochistan Bank to end local farmers’ financial woes.
Creation of the Balochistan Bank is aimed at enhancing credit disbursement to agriculture and SMEs sector in the province in the first place, officials of the provincial agriculture department say.
The establishment of the Balochistan Bank, on the pattern of Sindh Bank and Punjab Bank, in the next fiscal year, should help local farmers have greater access to formal finance
“One of the reasons why the agriculture sector of Balochistan has remained backward is that banks have literally ignored this province,” an official remarked.
It is not clear whether the Balochistan government will launch the provincial bank with 100pc of its own shares, as was the case with Sindh Bank, and if so where the amount would come from.
Officials in the provincial government say, without elaborating much on it, that they would likely find sponsors in addition to putting in part of the seed capital from the provincial exchequer.
In the next fiscal year, one more important thing planned for uplifting Balochistan’s agriculture sector is the provincial government’s plan to bring 57,000 acres of land under cultivation in Dera Bugti.
Mr Bizenjo said in his budget speech that part of the agriculture sector’s Rs8bn allocation would be spent on this scheme. He informed that under another scheme, also to be financed via budgetary allocation, agricultural farms would be set up across the province but gave no further details.
One senior official in the Balochistan agriculture department says that the main thrust of the scheme is on promoting research in agriculture innovation for boosting farm productivity, introducing new ways of increasing horticulture yields and demonstrating the benefits of green farming.
“All of this would be achieved by setting up small-scale model agricultural farms and pilot orchard projects,” he said.
The FY18 provincial budget has also allocated Rs2.81bn on the livestock sector, the bulk of which will be used for financing completion of 8 major projects.
One official familiar with these projects says these projects include establishment of two modern dairy farms, construction of facilities for a sheep and goat breeding farm, setting up of a camel research and camel milk processing unit, and construction of building for an artificial insemination centre.
Lack of water is the number one impediment to growth in agriculture and livestock sector. The growers’ community was expecting an announcement of key initiatives in the FY18 budget to address this issue. But the budget speech of the advisor to the chief minister on finance did not shed much light on it.
Provincial officials insist, however, that the FY18 development allocation for irrigation sector is higher than Rs1.8bn set aside in FY18.
They also say that two schemes for the irrigation sector have got budgetary allocation — one is related to water resources development and the other on integrated water resource information system for efficient use of water.
One issue with provincial spending on agriculture and livestock in Balochistan, as in Sindh, is that not only are long-term development schemes continually appearing on budget documents but even the ones announced for a year or two are not completed on time.
The FY18 Balochistan budget is no exception. Officials involved in preparing uplift schemes for both agriculture and livestock sectors say that many of them are just ongoing schemes.
Published in Dawn, The Business and Finance Weekly, June 19th, 2017