ISLAMABAD: Despite its significant role in the growth of Pakistan’s economy, the agriculture sector has never been the priority of successive governments and has failed to win enhancement in loans.
During discussions in a cabinet meeting held on January 16, it was revealed that the Produce Index Unit (PIU) - a measure of farm productivity against which farmers are given loans - had been fixed at Rs4,000 in 1973 and since then it had not been increased.
An increase in the unit will allow farmers to get their credit limit enhanced. The current government, however, had announced in its 2017-18 budget that it would increase the credit limit.
It was observed that taking the unit to just Rs5,000 after several decades would be tantamount to discrimination against the agrarian economy. The agriculture sector contributes 19.8% to the gross domestic product (GDP) - the size of national economy - and it remains, by far, the largest employer, absorbing 42.3% of the country’s labour force.
It was proposed that instead of applying PIU, the market rate or deputy collector rate should be adopted as a criterion for granting loans to the agriculture sector. But it is a complicated issue, which needs to be examined in depth.
The cabinet constituted an inter-ministerial committee comprising Privatisation Minister Daniyal Aziz, Power Minister Sardar Awais Ahmed Khan Leghari, Water Resources Minister Syed Javed Ali Shah and Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan. The committee will submit its report to the cabinet within two weeks.
The cabinet was informed that one of the initiatives announced by the finance minister in the budget speech for FY18 was about the enhancement in PIU from Rs4,000 to Rs5,000. The initiative is aimed at facilitating the farmers in obtaining maximum credit from banks.
The cabinet was informed that as per Section 5(1) of the Loans for Agricultural, Commercial and Industrial Purposes Act 1973, “the federal government or, if the federal government so directs, the provincial government may, by notification in the official gazette, make rules for carrying out the purposes of this Act.”
Accordingly, the Loans for Agricultural, Commercial and Industrial Purposes Rules 1973 were framed. The cabinet was told that in order to implement the initiative, an amendment was being proposed in the rules. In Rule 5, Sub-rule (2), Rs4,000 will be substituted with Rs5,000.
In that regard, the Law Division and the Cabinet Committee on Legislative Cases examined a draft notification in its meeting on November 2, 2017. They recommended the proposal for approval of the cabinet.
In terms of the Rules of Business 1973, the cabinet’s ratification was solicited on the recommendation of the Cabinet Committee on Legislative Cases in respect of the Loans for Agricultural, Commercial and Industrial Purposes Rules 1973.
Published in The Express Tribune, February 6th, 2018.
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