ISLAMABAD, Feb 25: After dilly-dallying for about five months, the government on Monday fixed price for wheat at Rs510 per 40 kg for public sector procurement of at least five million tons of the grain for the crop currently in harvesting stage. This is about 20 per cent higher than last year’s support price of Rs425 per 40 kg.

The decision, taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by caretaker prime minister Mohammedmian Soomro, called it procurement price because of a maturing crop instead of historic support price which used to be announced at the beginning of the cropping season to encourage maximum sowing by farmers.

The increase in procurement price would not provide incentives for increased sowing or production since harvesting had already started in Sindh to be followed in other provinces in the next few weeks, although it is expected to yield about Rs2.04 billion additional income to farmers across the country.

Analysts, however, believe that the fixation of procurement or support price, whatever it is called, may have already lost its utility given a much higher price in the open market in the wake of current year’s domestic shortages and higher international prices of this staple foodgrain.

Briefing newsmen after the ECC meeting, Economic Adviser to the Finance Ministry Dr Ashfaq Hassan Khan said it was the sixth time the ECC had discussed the wheat pricing during the current season. He said the issue price at which the government was currently releasing wheat to flour mills would remain unchanged at Rs465 per 40 kg to ensure that flour price was not increased.

He said a proposal for the procurement of seven million tons of wheat during the coming season was rejected by the ECC because of opposition from the Ministry of Food.

He said total stocks stood at 848,000 tons as of February 22. So far about 659,439 tons had been imported while more than one million tons was in the pipeline. The imports, therefore, would total 1.73 million tons.

AIRPORT SURCHAGE: The ECC also approved a Rs260 million salary package for Airport Security Force through imposition of surcharge at the rate of Rs20 per domestic passenger and Rs40 per international passenger to be charged through air tickets.

FINANCIAL INSTRUMENTS: The ECC reduced stamp duties on domestic debt market products from 10 basis points to one basis point or from 0.1 per cent to 0.01 per cent.

Likewise, it also reduced duties on capital market products like bonds, term finance certificates etc from 300-400 basis points to five basis points or from 3-4 per cent to 0.05 per cent. The ECC also reduced duties on transfer of these products from 4.0 per cent to 0.01 per cent subject to a maximum value of Rs100,000. This would include mortgage deeds and property deeds.

WAPDA LOANS: The ECC also approved raising of Rs48 billion loans from commercial banks for Wapda’s distribution companies.

LPG EXTRACTION: The ECC allowed Oil and Gas Development Company to set up LPG extraction plants at gas fields where LPG can be commercially extracted by amending the clause 3.1.1 of the LPG policy.