Agriculture contributes 24 percent to Pakistan's Gross Domestic Product (GDP) - directly, as well as indirectly through providing raw material to industry, notably textiles and sugar - two major large scale manufacturing (LSM) industries. From a political perspective agriculture is critical as it accounts for nearly half of the country's total employed labour force.
The annual economic surveys continue to extol the relevance of this sector to Pakistan's economy. The Survey 2019-20 noted that "agriculture is still the largest sector of the economy of Pakistan in terms of labour participation and as such livelihood of the majority of the population directly or indirectly depends on it. During the last few decades its contribution to GDP has gradually decreased to 19.3 percent however there is a lot of potential to increase its share in GDP through increased productivity utilization of latest agricultural technologies." Critics highlight two areas of concern with respect to this statement: first, the focus is clearly on employing the latest technology to raise the yield per hectare given the much lower yield of poor farmers (reliant heavily on aarthis to enable them to purchase inputs and to market the commodity) relative to the rich farmers like Jehangir Tareen - the de facto architect of the farm policy announced in 2019 whose focus undermined the more than "65-70 percent of the population (that) depends on agriculture for its livelihood," as noted in the Economic Survey 2020-21 released after the summary dismissal of Jehangir Tareen from the corridors of power. And second the 19.3 percent estimate does not take account of the sector's direct and indirect contribution to industry.
The most recent Survey further contended that agriculture's growth has been constrained by "shrinking arable land, climate change, water shortages, and large scale population and labour shift from rural to urban areas. With strong forward and backward linkages with the secondary (industrial) and tertiary (services) sectors it can play a pivotal role to spur economic growth." It can indeed and the modus operandi of previous and present Pakistani governments has been to taxpayers' money to subsidize inputs including fertilizer and utilities (electricity and water).
So why is it that almost 90 to 95 percent of those engaged in this sector lack basic essentials and are genuine claimants for socio-economic justice? Land ownership remains highly concentrated with poverty strongly co-related to landlessness.
The last land reforms took place during Z A Bhutto's tenure however they led to little fragmentation of land ownership as there was no accompanying legislation focusing on benami ownership. After the passage of the benami transactions prohibition rules 2019 this is no longer possible as they allow the government to initiate criminal proceedings against the accused and, if found guilty, to be awarded rigorous imprisonment (from one to seven years) while whistleblowers will be entitled to a cash reward of 2 percent on property worth 2 million rupees and 4 percent on property valued at over 2 million rupees. These rules, such is the consensus, were passed to meet the requirements of the Financial Action Task Force and their implementation clearly presents a challenge as there have been no reported cases under these new rules to-date.
Be that as it may, there is no doubt that elite capture of this sector has perhaps been strengthened rather than weakened over time for two reasons. First, the number of absentee landlords sitting in the country's federal and provincial assemblies continues to surpass any other socio-income group to this day and they have ensured that the constitutional clause rendering agriculture a provincial subject is retained. Provincial assemblies, under pressure from donor agencies, began to impose a tax on farm income but at a rate that is simply not commensurate with the rate of tax paid by the middle income salaried class.
And second, all governments, including the incumbent, earmark taxpayers' money to subsidise farm inputs (fertilizers, seeds), water rates well below cost, tube-well rates below cost, interest-free loans to poor farmers - incentives that have been by and large hijacked by the rich farmers.
The question arises as to why the Khan administration committed to social justice relative to other political parties, rhetorically at least, has not taken measures to reduce the elite capture of the farm sector? The Prime Minister has considerably expanded the ambit of debit cards payable from the taxpayers' money - from Benazir Income Support Programme that he inherited to Kamyab Kissan Card (enabling purchase of expensive farm machinery, including tractors and interest-free loans to poor farmers) to Kamyab Jawan programme, however he has not focused on dealing with the elite capture of agriculture which is not unique to Pakistan. Regional and non-regional countries including India suffer from this malaise.
A study undertaken by two Monash University faculty members - Gangadharan and Maitra, one Phd student, Vecci, and one faculty member from the Indian School of Business - noted that "Despite large expenditures in rural development, a centralized bureaucracy with low accountability and inefficient use of public funds limits the impact on poverty and growth. To help India's growth and to ameliorate poverty, a community based approach has been suggested where people in rural areas make decisions about development programs... However, a community based approach - is not without its weaknesses. Failure can occur when particular subgroups of the community, are able to mobilize resources to further their own self-interest. This appropriation is termed 'elite capture'. So while community-driven development is a promising path to achieving the goal of rural development and empowerment of the poor, there is a need to understand how it is potentially hampered by elite capture." Pakistan suffers similar constraints in dealing with elite capture of the farm sector as does Bangladesh as support targeted to the poor farmers is routinely hijacked by the rich farmers.
To conclude, one would hope that the significant 2021-22 budget support for water to seeds, fertilizer, agri-credit and machinery, commodity warehousing, cold storage and food processing industry is carefully monitored. And the formation of community based activities, including cooperatives, proactively pursued as a means to phase out the elite capture of agriculture.
Copyright Business Recorder, 2021