LAHORE: Accepting one of the farmer community’s biggest demands, the federal government decided to forego the imposition of a general sales tax (GST) on fertiliser and pesticides — both vital inputs — in its budget proposals for the upcoming fiscal year. Still, stakeholders are complaining that it ignored many more demands that it had previously promised it would consider.

Finance Minister Muhammad Aurangzeb on Tuesday acknowledged before parliament that the agriculture sector, responsible for 24 per cent of Pakistan’s Gross Domestic Product (GDP), had not performed well last year. He assured, however, that the government has extended it a helping hand not only to get it back on its feet, but to keep it up and running.

“Though [this is] a provincial subject, the prime minister has constituted a national committee for consultations with the provinces to [find ways to] improve it.”

Sectoral loans have risen from Rs1,785 billion in the first 10 months of the last fiscal year to Rs2,066 in the corresponding period of this year, the minister said. Keeping in view the rising demand, the federal government will be starting a ‘Clean Financing Facility’ to provide farmers up to Rs100,000 without collateral, with the money transferred directly to their e-wallets. The government has also planned a National Seed Development and Regulatory Authority that will help develop standardised seeds which can withstand climatic changes and improve yields.

Pesticides, fertilisers to remain exempt from sales tax, but reviving sectoral growth an uphill task

Though cotton, one of the most important crops, has suffered during the last few years, there was some improvement noticed during the outgoing fiscal year, the finance minister said. The government plans to capitalise on this improvement by allocating over Rs4 billion to 10 ongoing and five new schemes for agricultural improvement. Under the Green Pakistan Initiative, farmers will be helped in diversifying crops, meeting yield gaps, and gaining better access to markets. The government is also sending 1,000 agriculture graduates to China for training in modern agriculture; a batch of 300 students has already been sent under the programme, the finance minister said.

Farmers, however, are less impressed. Explaining their annoyance, Khalid Khokhar of the Pakistan Kissan Ittehad said the sector had registered a massive contraction in the outgoing year and its paltry growth (of 0.56pc) was attributable mainly to the livestock sector; otherwise, the final figure would have been deep in red territory.

Mr Khokhar wondered how the sector could grow by 4.5pc when the budgetary philosophy and allocations did not seem to support that target. “Seed improvement is a slogan, but where is the money to realise it?” he asked. “The government has pulled out of the market – refusing to fix procurement price and procure wheat, but where is the alternative arrangement? Are hoarders and stockists now the answer?” he added.

“Take it from me, next year will be worse if corrective measures, which are not visible in this budget, are not taken,” he concluded, adding that “not slapping GST on fertiliser and pesticides is a big relief, but it is not enough to help revive the sector.”

Separately, a Punjab government official regretted what he described as ‘federal insensitivity’, complaining that the budget had fulfilled only one of many promises. “The federation had also promised to cut duties on farm machinery, which is badly needed by the sector; reduce, as far as it could, fertiliser prices; and spearhead research and development initiatives. [Instead], it hid behind jargon and small concessions to escape responsibility, which can only be regretted. Avoiding GST on two inputs, however, is a welcome step,” he added.

Published in Dawn, June 11th, 2025