Much of the poverty and stagnation in developing countries can be traced back to reluctance to take to innovations. Pakistan, once one of the largest producers of cotton in the world, has now become a major importer of the commodity. Cotton output in the country has gradually been falling in recent years. Now the output has decreased to seven million bales, the lowest in the past several decades. The main reasons for this are lack of interest on the part of authorities to invest in research and to introduce innovations to increase the yield of the commodity, and reluctance on the part of textile manufacturers to pay the cotton cess, which was to be invested in research and development to increase the production of the commodity.
The previous government had introduced the cess with a view to raising funds to promote R&D. The payment of the cess was made a must for the registration of textile mills and for their entitlement to subsidies on energy supply. Textile mills seem unwilling to contribute to the cess, and this shows up in manufacturers challenging cess collection in courts. This has led to a drastic fall in cess receipts since 2016. The Pakistan Central Cotton Committee supervises R&D in cotton cultivation. Its financial needs are met by collection of cess on cotton export and consumption, but the decline in collection of taxes is hindering its R&D activities. This has resulted in the decrease of cotton production. Over the past seven months, the cess collection stands at Rs135.36 million against the estimated receipt of Rs588 million. The PCCC’s financial difficulties might be mitigated now that the ECC has okayed a grant of Rs419 million for its R&D activities.
When Henry Ford introduced motorcars in the US, there were no proper roads in the country. Good roads were built from the money raised through taxes on vehicles and fuel. So first came the innovation and the infrastructure later.
Published in The Express Tribune, March 25th, 2021.
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