Agriculture is Pakistan's major resource and the backbone of its economy. The sector accounts for almost 21 percent of the country's GDP and it provides employment to nearly 45 percent of the population. But the sector remains in a moribund state. It has never received the attention it deserves in terms of budget allocation, development planning and investment. With sufficient time and money put in this sector, Pakistan can become a major exporter of food to the Middle East and Central Asia. Year after year, the sector has continued to stagnate. The sector missed the 3.8 percent growth target against the provisional growth of 2.1 percent last year which is lower than the target by 0.8 percentage points.
To improve the situation, in this year's budget a number of incentives have been offered for small and marginal farmers. These include sales tax exemption on high irrigation equipment for green house farming, removal of customs duty on plastic coverings, anti-insect nets for tunnel farming, credit guarantee schemes for small and marginalized farmers with 50 percent loss sharing, livestock insurance scheme for farmers with up to 10 heads of cattle and crop loan insurance scheme for farmers with 25 acres of land. A representative of Pakistan Agriculture and Dairy Farmers Association recently said that budget allocations made for supporting the agriculture sector were not at par in terms of the share it holds in the GDP. It has also been pointed out that no steps have been taken to withdraw sales tax on all agricultural inputs except a reduction in sales tax for tractors from 16 percent to 10 percent. The Seed Association of Pakistan has drawn attention to the fact that the availability of water was 13.5 percent lower for Kharif crops and 10.7 percent lower during the Rabi season than the normal supply. .
One reason why budgetary allocations for agriculture are low is that its revenue potential has yet to be fully exploited. During his last budget speech the Finance Minister referred to the low agriculture tax collection by provinces. But income tax is a federal subject and the time has come to subject the rich landlords to the same IT rules as industrialists and the salaried classes. If high agricultural income is taxed, there will be enough revenue generated for investment in the uplift of agriculture as a whole. Feudal lords enjoy significant lobbying power in the parliament, which has enabled them to avert the effective levy of Agriculture Income Tax so far. But this anomalous situation cannot be allowed to continue any longer.
According to a report of the UN Food and Agriculture Organisation (FAO), the area under agriculture crops in Pakistan has stagnated and no expansion is foreseen due to dwindling water resources and other related factors. Soils in Pakistan are low in organic matter and many plant nutrients. In general, 90 percent of the soils are poor in organic matter, 80 percent low in phosphorous and 40 percent low in potassium.
The deficiency of zinc and boron is widely reported at above 50 percent in field crops. Iron deficiency in deciduous fruits is also a common occurrence. Out of 80 million hectares of total agricultural area of Pakistan, about 22 million hectares are presently cultivated. There is also pressure on land in semi-urban areas where agriculture land is being eaten up by housing societies. Keeping in view the importance of the sector, the government should focus on improving agricultural productivity by systematic application of better inputs and advance technology, etc.