20000312

Credit to agri sector

recommended

on need basis

RECORDER REPORT

KARACHI: The sub-committee on agriculture, constituted by the Economic Advisory Board (EAB), Ministry of Finance, has recommended that commercial credit to the agriculture sector must be provided on need basis rather than as ad hoc allocations on yearly basis.

Since the minimum basic production credit needs of this sector are over Rs. 100 billion, the allocations for agriculture must be increased to Rs. 100 billion, a sub-committee report said.

On the question of marketing of agricultural products, it said all agriculture produce and commodities must be freed from administrative controls and prices may be allowed to operate in a free market environment. All export restrictions on agriculture production must be lifted.

The support price mechanism must be maintained, the report recommended. The Government should ensure effective and efficient implementation of price support through an autonomous agency, until the private sector can take over this function.

In order to deal with surplus produce, marketing institutions for each crop may be formed in the private sector, managed by the growers. The government may provide seed money and operational backup on a one-time basis and further funding be supplemented every year through a cess on a particular crop. These institutions may conduct trade in their commodities through forward marketing etc.

Other recommendations include:

Ñ Income tax must be paid where income is generated. The most efficient and convenient way would be to impose a tax on land ownership. This can raise the desired revenue in a convenient way.

However, if this is not acceptable due to other considerations such as documentation, then the larger landowners, 50 irrigated or 100 barani acres and above, may be taxed via direct income tax through assessment of their net income.

Ñ Farmers falling between 12.5 acres and 50 acres may remain under the presumptive tax already prevalent. Small farmers upto 12.5 acres may be exempt. Keeping in view the geographical distances and literacy rate, the farmer must deal with the officials of the provincial revenue department instead of the ITO.

Ñ Because of the imposition of the direct agriculture income tax the official recovery of land revenue and Ushr would no longer be required. Taxation amongst provinces must be uniform. All wealth tax on agricultural land may be abolished since it is a means of production and therefore, must be equated with industry.

Ñ Jagirs and Jagirdari system has been abolished as per the provisions of MLR-64 (Land Reforms of 1958). This should be implemented in cases where it has not been done so far. Unauthorised occupation of government lands in the riverine areas must be eliminated, the report said.