The agriculture sector, which has been severely affected by devastating floods, will receive significant support from the federal government in the upcoming fiscal year 2023-24. These initiatives aim to improve the rural economy, ensure food security, and address the sector’s challenges.
During the budget session on Friday, Finance Minister Ishaq Dar announced several key measures. One of the major steps is an increase in the allocation for the Kissan Package, initially introduced in 2022. The package, which has proven to be beneficial for the rural economy, will see an increase in allocation from Rs1,800 billion to Rs2,250 billion to further enhance crop yields.
To promote growth in the agriculture sector, the government has proposed allocating Rs30 billion to shift 50,000 agricultural tube wells to solar energy. This move aims to reduce farmers’ reliance on diesel for operating their tube wells. Furthermore, exemptions from customs duty have been announced for raw materials/inputs used in rice mill machinery and the import of crop seeds for sowing.
The government has also provided exemptions from sales tax on various items, including plant saplings, combined harvesters, dryers for agricultural products, and planting equipment. Additionally, a 1% concessionary final tax rate has been offered to indirect exporters, encouraging the export of agricultural produce, gems, metals, and other commodities through online platforms.
Agro-based small and medium enterprises (SMEs) with an annual turnover of Rs800 million will benefit from a five-year tax holiday. Moreover, Rs5 billion has been allocated for concessionary loans to agro-based industries, with the aim of revolutionizing the rural economy. Another Rs10 billion has been set aside to provide mark-up subsidy for the PM’s Youth, Business, and Agricultural Loan Scheme, along with low mark-up loans for small-scale farmers.
To ensure the availability of fertilizer, Rs6 billion has been allocated as a subsidy for fertilizer imports. However, some farmer lobbies express concerns that these measures may not effectively improve the lives of farmers, as they do not address the high costs associated with farming. They argue that the government should focus on reducing the prices of fertilizers, pesticides, diesel, and electricity, which pose significant challenges to farmers.
Khalid Khokhar, the President of Pakistan Kissan Ittehad, welcomes the exemption from taxes on machinery imports but emphasizes the need for concrete measures to reduce the overall cost of doing business for farmers. He points out that the current market prices of fertilizers, particularly DAP, are exceptionally high, and farmers are forced to bear these costs despite the fertiliser subsidy not leading to price reductions.
Khokhar further criticizes the increase in Kissan Package funds, stating that it primarily benefits agro-based industries rather than small farmers. He expresses skepticism about the Finance Minister’s claim that this package will improve farmers’ lives. Additionally, he questions the government’s announcement of measures regarding the import of seeds, as he believes there were no taxes imposed on seed imports previously.
Published in PakWeb, June 10th, 2023.
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