ISLAMABAD: The government on Wednesday approved a Rs50 billion package for the agriculture sector and about Rs17bn additional funds to defence forces to foot extra fuel bills.

The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, presided over by Finance Adviser Dr Abdul Hafeez Shaikh, that also approved in principle a cell phone assembling policy.

The ECC was given a demand of Rs56.6bn agriculture package to provide the farmers subsidy on fertilisers, reduction in bank mark-up on agriculture loans, subsidy on cotton seed and white fly pesticides and sales tax subsidy on locally manufactured tractors as part Rs100bn earmarked for farmers and small and medium enterprises (SME) out of the Rs1,200bn coronavirus relief package.

However, Shaikh asked the food security ministry to rationalise it to Rs50bn as per its share in the overall Rs100 package announced for the SMEs and the agriculture sector.

He said the ECC had already approved a Rs50bn package for the former to provide indirect cash flow support to nearly 3.5 million people through pre-paid electricity.

Rs17bn set aside for defence forces’ fuel bill

Under the agriculture package, about Rs37bn subsidy would be offered to farmers on the purchase of fertilisers. The amount would include a subsidy of Rs925 per bag on DAP and other phosphatic fertilisers and Rs243 per bag on urea and other nitrogen fertilisers.

The ECC was told that the estimated urea offtake would be around 3.04m tonnes while DAP was estimated at 0.95m tonnes for the Kharif season. The subsidy scheme will be implemented by the provinces and the amount will be disbursed through a scratch card scheme already in place in Punjab.

It was also informed that the fertiliser share in the cost of production for major crops was around 10-15 per cent and the provision of subsidy would increase their affordability to adopt the recommended level of fertiliser nutrient use and best agricultural management practices.

Similarly, under the agriculture package, a reduction in mark-up of agri loans at the total cost of Rs8.8bn, subsidy on cotton seed worth Rs2.3bn and white fly pesticides at Rs6bn were also approved.

Furthermore, the ECC called for inclusion of other banks along with Zarai Taraqiati in the scheme to enhance outreach of farmers with focus on subsistence farmers with a land holding of 12.5 acres. It was suggested that since markup had been reduced by the State Bank of Pakistan, the interest rates used in the proposal could also be rationalised accordingly.

The ECC called for the implementation mechanism, especially through the scratch card system, to be monitored carefully to ensure that the actual beneficiaries of the package were genuine farmers.

It was also pointed out that since with the provision of subsidy on fertilisers, their demand might increase, the same had to be communicated to the Ministry of Industries and Production (MoIP) in time to make arrangements accordingly.

The meeting 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 Rs12,000 for six months from January-June while from July onwards, those families will be given monthly installments of Rs2,000 each until end of December.

The ECC took up different proposals for technical supplementary grants by various divisions and approved one by the Defence Division for a supplementary grant of Rs16.6bn to meet the expenses on POL, utilities and medical stores of the Defence Services.

In addition, it okayed Rs288m for payment of salaries to the employees of Pakistan Machine Tool Factory for the period from October 2019 to June 2020 and Rs40 million to the law ministry for employee-related costs and operating expenditures of the Federal Judicial Academy.

The ECC also discussed the Mobile Device Manufacturing Policy as proposed by the MoIP with the objectives of technology acquisition and localisation of mobile devices through domestic investment, joint ventures, FDIs, creation of 200,000 direct and indirect jobs, price reduction for consumers, increase in digitisation through supporting 4G/5G technologies, development of efficient manufacturing ecosystem, exports of competitively manufactured handsets and achievement of security objectives.

It deliberated upon various components of the policy and approved in-principle with instructions to the MoIP to further fine-tune its various features and incentives for promoting localisation and research and development leading to export of mobile phones.

Lastly, the ECC gave green signal to the release of 35,000 tonnes of wheat from the Pakistan Agriculture Storage and Services Corporation to the Azad Jammu and Kashmir government at Rs1.52bn, including the cost of wheat and incidental charges, to be paid 50pc by the federal administration from the stimulus package announced to fight against Covid-19.

Published in Dawn, May 14th, 2020