The Benazir Tractor Scheme (BTS) under which the government will provide 20,000 tractors to subsistence farmers at subsidised rates, is a timely and useful initiative that will not only help the small farmers, it will also substantially contribute towards augmenting the country's agricultural produce.
The scheme, as approved by the federal cabinet, envisages provision of a subsidy of Rs 0.2 million per tractor, with the option of buying locally manufactured or imported tractors left to the farmers. Sources have informed Business Recorder that some "fake tractor importers" have meanwhile started using underhand tactics to gain entry into the scheme, which must be resolutely resisted by the government.
The relevance of the scheme lies in the fact that in Pakistan there is a marked difference in the per-hectare crop yield of a rich and a subsistence farmer, attributed mainly to paucity of availability of inputs such as high-yielding seed varieties, fertiliser, timely and adequate water supply and tractors, to the subsistence farmer.
The Prime Minister's Advisor on Finance and Revenue, Shaukat Tarin, has said that the government's policy thrust is not only on ensuring food security but also on ensuring income security to the farmers. According to estimates, BTS will cost Rs 10 billion, with the government providing Rs 4 billion. The local manufacturers are, meanwhile, committed to a delivery schedule of three to six months, which, if scrupulously observed, should be fine.
It will be recalled that efforts by former governments, notably the Junejo government, to advance zero-interest loans to subsistence farmers were frustrated by rich farmers. The government should therefore recognise the potential of the scheme's misuse, and fashion a strategy to observe absolute transparency. One way to ensure transparency is to provide tractors through a foolproof balloting system, using data on subsistence farmers.
This will not only ensure supply of tractors to the targeted group; it will also help curtail the element of discretion and favouritism. Another possibility is the misuse of this scheme through proxy applicants. The government should employ its resources to prevent this from happening.
In view of the free import regime, the cabinet has rightly decided that the availability of spare parts and transfer of technology must be made the primary criterion to accommodate imported tractors because the tractors will be of little use without timely and assured availability of spare parts.
Secondly, the policy lays down the ceiling for land holdings, which will help in categorisation of the would-be beneficiaries. The cabinet has further decided that the provincial share would be determined on the basis of the population's size, though other criteria used for determining a province's share in the NFC award, can also be applied, if needed.
It has been rightly decided that special quotas for Balochistan, Fata, Fana and AJK are desirable. These are indeed useful policy parameters that should be strictly observed to ensure implementation of the scheme in the spirit in which it has been conceived and announced by the government.
As we have argued in this space earlier, it is doubtful whether a subsistence farmer, with his low-income status and virtually no savings, would have enough money to be able to purchase even a subsidised tractor. Therefore, encouraging such farmers to form co-operatives to be able to raise sufficient money to buy subsidised tractors would be a good move.
Secondly, it has been decided that half of the subsidised tractors should be earmarked for subsistence farmers, with the other half being possibly allocated to the lower middle-income farmers, though we believe that the scheme would better serve its objectives if it is restricted to subsistence farmers.
However, if middle-income farmers are also to be accommodated, separate balloting should be held for each category. Thirdly, some circles may object to the government's policy of allowing tractor imports at subsidised rates, which is viewed as bad economic policy anyway because of the country's depleting foreign exchange reserves.
Committed as it is to bettering the lot of the poor, the PPP-led government of Prime Minister Gilani would be well advised to arrange funds also through observing genuine austerity by slashing all inessential government expenditure. We believe that imposing a small levy on rich farmers, in the fashion of a cross-subsidy as applied in other sectors of the economy, can yield substantial dividends.
Mention in this context needs also to be made here of the Punjab government's "green tractor scheme" which is facing problems due to lack of sufficient resources, and the government has reportedly requested the local tractor manufacturers to lower the price. The same strategy can be applied, if needed, in case of the Benazir tractor scheme as well.
Entrusting BTS to local manufacturers or to importers of tractors have both positive and negative implications for implementation of the scheme. The local manufacturing should obviously be the first choice of the government, because this will not only help boost our auto sector; it will also help generate additional employment in the manufacturing sector.
Secondly, this will impart a powerful boost to the subsidiary industry of spare-part manufacturing. Thirdly, the local manufacturers can be pressured to observe the delivery schedule, which may not be possible in case of imported tractors. According to one estimate, there has been as much as 86 percent spare parts depletion in the country, and entrusting BTS to local manufacturers can help fill the vacuum.
However, on the negative side are the crippling power outages, and the high cost of production, which could result in cost-overruns. Above all there is the question of quality control. Will the locally manufactured tractors and spare parts be of sufficiently high quality to ensure durability? Entrusting half of the BTS to local manufacturers would indeed be a desirable option provided the government can ensure adherence to all quality control parameters.
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