Wooing the rural vote

Published: January 27, 2012
The writer, a former chief economist of the Planning Commission, is at present based at Cambridge in the UK 

The writer, a former chief economist of the Planning Commission, is at present based at Cambridge in the UK [email protected]

After gaining a foothold in the urban vote belts of Punjab and Karachi, the Tehreek-e-Insaf chief is testing the waters in the rural belts –– whose vote will decide the composition of future government. In a rally at Bhalwal near Sargodha last week, he declared that his tsunami for change would be more rural than urban. This is what it must be if he is to succeed.

Even if the new and, hopefully, transparent voter lists show a significant rise in the urban vote, the rural vote will still outweigh it hugely. It also requires a vast physical expanse to be covered. More important, the issues facing the people in rural areas are quite different. Oratory against inflation does not cut any ice. The gas shortage affects no choolah in rural hutments and the long hours of power cuts hurt only some. Only drinking water attracts some attention. Corruption, leaking public sector enterprises and judicial activism are of no concern to people in the rural areas. Justice has meaning, but only with reference to distribution of land. And in its absence, the large landowners manage their respective flocks of voters.

As a result, the relationship between the voters and those seeking votes becomes transactional. This makes for a difficult ground for a party that has never been in power. Concrete actions weigh more than future promises. An incumbent government in control of the public purse has an edge. The PPP considers rural areas of Sindh and southern Punjab as its vote bank. Far from the madding urban noise about its misgovernance, the party has gone out of its way to maximise the returns from its transactional compact with rural voters.

The government has failed miserably in balancing revenues and expenditures. A critical factor contributing to this has been its support to the agriculture sector, shielding it from taxation. It has resisted pressure from donors, advice by its own economic teams and even legislative efforts by political allies to tax agricultural income. Agricultural produce is exempt from sales tax and tractors from customs duty. Secondly, in cases where it had to tax agriculture indirectly, the levies were reduced or withdrawn after a short period of time. For example, general sales tax on tractors has been reduced from 16 to five per cent. Agricultural produce purchased directly from growers has been exempted from the 3.5 per cent withholding tax, a major concession to the cotton belt of south Punjab. The impact of sales tax on fertilisers is lessened through a subsidy and gas allocation on priority. On the expenditure side, Rs21.6 billion was spent in 2010-11 on agriculture and rural development, subjects which were to be devolved to the provinces.

Imran Khan promised rural change by repeating the miracle of India’s Punjab and if achieved this could add Rs300 billion to incomes. But the experienced vote-seekers (politicians) of our rural areas have already boosted rural incomes by an even larger amount of Rs342 billion: this in 2010-11 alone, and mostly by raising the support price of wheat. Help comes in other ways as well, as in the case of sugar cane where the government has wasted no time in picking up surplus sugar so that the millers can pay the sugarcane farmers. A bonanza is likely to be announced in the next budget. If this requires rupees to be printed by the State Bank, so be it.

The Kaptaan has to promise land reform and that he will tax agricultural incomes. Let the landlords declare their assets too!

Published in The Express Tribune, January 27th, 2012.

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Reader Comments (4)

  • John B
    Jan 27, 2012 - 1:27AM

    All over the world the rural voters are interested in three things: Food, clothing and shelter. In the subcontinent history, Gandhi sensed it in his movement against British and in PAK ZA Bhutto clearly articulated it.

    Urban elites are interested in their stock holdings(figuratively speaking) and rural masses are interested in basic things. Typical of Macro economy Vs Micro economy priorities. Micro economy requires subsidies, preferential priority, and fiscal spending Vs Macro economy requires fiscal discipline, and taxation.

    The politician who senses this distinction captures the rural vote, all over the world.


  • Falcon
    Jan 27, 2012 - 2:04AM

    Great article. It highlights our pains. Imposition of tax in agricultural sector is one of the key challenges any new govt. has to address if it were to make any significant structural reforms. However, that also means committing a political suicide in rural politics. So the only option left is to explore alternate avenues such as land reforms and infrastructure development to lure rural voters.


  • Danali Dahraj
    Jan 27, 2012 - 2:09AM

    Excellent article, and I am not saying that just because you read my mind. Imran Khan, in his party The PTI, has big landlords himself whose land-holding do not only exceed highly over the limit of any of the land-reforms brackets but also are involved in absentism of the landlords.


  • JS
    Jan 27, 2012 - 11:56AM

    lack of taxes and more importantly lack of DIRECT TAXES is the most important issue facing this economy. All income over a minimum amount should be taxed…does not matter if it comes from farming, industry, stocks, or trade…ALL INCOME NEEDS TO BE TAXED. How can anyone justify roaming around in land cruisers worth almost 2 crores while not paying taxes because he earns from agriculture?!?!?


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