The Economic Coordination Committee (ECC) of the Cabinet has approved a multi-billion agriculture package to provide the farmers subsidy on fertilizers, reduction in bank mark-up on agriculture loans, subsidy on cotton seed and white fly pesticides and sales tax subsidy on locally manufactured tractors. The agriculture package is part of the Rs 100 billion earmarked out of the Rs 1,200-billion coronavirus relief package, for the Small and Meidum Enterprises (SMEs) and the agriculture sector.
The agriculture package was proposed by the Ministry of National Food Security and Research at a cost of Rs 56.6 billion but the ECC chaired by Adviser to the Prime Minister on Finance & Revenue Dr Abdul Hafeez Shaikh asked the Ministry of NFSR to rationalize it as per its share in the overall Rs 100 package announced for the SMEs and the agriculture sector out of the Rs 1200 billion coronavirus relief package.
The ECC had already approved a Rs 50 billion package for the SMEs to provide indirect cash flow support to nearly 3.5 million people through pre-paid electricity. Under the agriculture package as prepared by the Ministry of National Food Security and Research in consultation with the stakeholders, subsidy to the tune of approximately Rs 37 billion would be offered to farmers on the purchase of fertilizers. The amount would include a subsidy of Rs. 925 per bag on DAP and other Phosphatic fertilizers and Rs. 243 per bag on urea and other nitrogen fertilizers.
The ECC was told that the estimated Urea offtake would be around 3.04 million ton while DAP was estimated at 0.95 million ton for the Kharif season. The subsidy scheme will be implemented by the Provinces and the amount will be disbursed through scratch card scheme already being implemented by the Province of Punjab. The ECC was told that the fertilizer share in cost of production for major crops was around 10 to 15 percent and the provision of subsidy would reduce cost of production for farmers and increase their affordability to adopt the recommended level of fertilizer nutrient use and best agricultural management practices. Similarly, under the agriculture package, reduction in mark-up of agriculture loans to farmers at the total cost of Rs. 8.8 billion and subsidy on cotton seed at a cost of Rs 2.3 billion and White Fly pesticides at a cost of Rs 6 billion were also approved.
The package would also include Rs 2.5 billion subsidy on sales tax on the locally-manufactured tractors for a period of one year. Earlier, the ECC discussed various features of agriculture relief package in detail and lauded the efforts of the Ministry of National Food Security and Research for preparing a comprehensive package for the farmers. However, the ECC called for inclusion of other banks along with ZTBL in the scheme to enhance outreach of farmers with focus on subsistence farmers with a land holding of 12.5 acres. It was also suggested that since markup had been reduced by the State Bank of Pakistan, the interest rates used in the proposal could also be rationalized accordingly.
The ECC also called for the implementation mechanism, especially through the scratch card system, to be monitored carefully to ensure that the actual beneficiaries of package were genuine farmers. It was also pointed out that since with the provision of subsidy on fertilizers demand for the fertilizers might increase, the same had to be communicated to the Ministry of Industries and Production in time to make arrangements accordingly.
The Minister NFSR assured that the regular offtake of fertilizer was being subsidised, however, any increase would be communicated to the relevant Ministry. During the meeting, the ECC also approved a proposal by the Poverty Alleviation & Social Safety Division for disbursement of the Special Relief Package for the population living along the Line of Control in a single installment of Rs 12,000 for six month months from 1st January to 30th June 2020 while from July onwards, LoC families would be disbursed monthly installments of Rs 2,000 each till 31st December 2020. The ECC also took up different proposals for technical supplementary grants by various divisions and approved one proposal by the Defence Division for technical supplementary grant of Rs 16.6 billion to meet the expenses on POL, utilities and medical stores maintained by the Defence Services and another proposal by the Finance Division for a technical supplementary grant of Rs 288 million for payment of salaries to the employees of Pakistan Machine Tool Factory for the period from October 2019 to June 2020. The ECC also approved a proposal by the Ministry of Law and Justice for technical supplementary grant of Rs 40 million for the employees related and operating expenditures of the Federal Judicial Academy.
The ECC also took up a proposal by the Ministry of Industries and Production regarding the human resource rationalization of workforce of Pakistan Steel Mills at a cost of Rs 18.74 billion to be paid for retirements and termination dues of over 8000 of 9000 PSM employees. The ECC discussed the proposal in detail and asked the Ministry of Industries and Production to re-work the scheme in consultation with the PSM Management to extend its scope to a maximum number of PSM employees and bring it back to ECC. The ECC also discussed the Mobile Device Manufacturing Policy as proposed by the Ministry of Industries and Production with the objectives of technology acquisition and localization of mobile devices through local investment, joint ventures, foreign direct investment; creation of 200,000 direct and indirect jobs, price reduction for consumers, increase in digitization through supporting 4G/5G technologies, development of efficient manufacturing eco-system, exports of competitively manufactured handsets and achievement of security objectives. The ECC discussed various components of the policy and approved it in-principle with instructions to the Ministry of Industries and Production to further fine-tune its various features and incentives for promoting localization and research and development leading to export of mobile phones.
The ECC also considered and approved a proposal by the Ministry of National Food Security and Research for release of 35,000 metric tons of wheat from the PASSCO to the Azad Jammu and Kashmir government at a cost of Rs 1.52 billion, including cost of wheat and incidental charges, to be paid 50 per cent by the federal government from the stimulus package announced to fight against COVID-19.