Prime Minister's Agriculture Package



Prime Minister Nawaz Sharif on September 15, 2015 announced a mega relief package of Rs 341 billion for small farmers. The relief package includes direct cash support, subsidies and provision of soft agriculture loans. It is the largest economic development program for the agricultural sector in the history of Pakistan. It is aimed at introducing progressive agriculture on scientific lines, reducing production cost of crops and make the small farmers prosperous. Under the Prime Minister's Agriculture Package:

  • Small farmers would get the chunk of Rs 147 billion as direct benefit while Rs 194 billion has been allocated for agriculture loans.
  • The farmers cultivating rice and cotton at up to 12.5 acres of land would be given cash support of Rs 5,000 per acre. The government on this facility will bear the cost of Rs 20 billion each for rice and cotton crops.
  • Announced setting up a Rs 20 billion fund to reduce prices of fertilizers which will lessen Rs 500 per bag of Potassium and Nitrate fertilizers. Also, the government was negotiating with local fertilizer manufacturers and gas companies to revert the increase in prices of fertilizers which has gone up by Rs 200 per bag.
  • It had been decided to provide Liquefied Natural Gas (LNG) to fertilizer companies to overcome the shortages of gas supply.
  • The government would bear the Rs 2.5 billion premium on the agricultural insurance which will benefit 0.7 million small farmers.
  • Solar tubewells would be provided on mark up free loans to the farmers who own up to 12.5 acre of land. The mark up of seven years would be paid by the federal government with a cost of Rs 14.5 billion. This would ensure a saving of Rs 1,600 and Rs 500 per day for the farmers running tubewells on diesel for five hours daily and on petrol for same duration, respectively.
  • The electricity price for running tubewells at peak hours has been fixed at Rs 10.35 per unit and Rs 8.85 at offpeak hours. The sales tax on these bills amounting Rs 7 billion would be borne by the federal government.
  • The custom duty, sales tax and withholding tax on the agriculture machinery has been reduced from 45 percent to nine percent.
  • The rice millers has been given full exemption on the turn-over tax for year 2015-16.
  • The traders of agriculture commodities, fruits, vegetables and fish would get an exemption of three years on income tax while the sales tax on cold chain machinery has been reduced from 17 to seven percent.
  • The installation of production unit of Halal meat that will be registered before December 31, 2016 will be given a four-year exemption on income tax.
  • The government would provide Rs 30 billion as the fifty percent guarantee to banks on loans. This will benefit around 0.3 million farmer households through Rs 0.1 million each with collateral loans.
  • The time-limit to pay back Rs 34 billion outstanding loan on the rice traders has been extended up to June 30, 2016.
  • The government and the State Bank of Pakistan are working over reducing the mark-up rate on agriculture loans by two percent which would give a benefit of Rs 11 billion per annum to farmers.
  • The Zarai Taraqiati Bank Limited and commercial banks would provide one-window facility to the farmers seeking loans.
  • The value of production unit has been increased from Rs 2,000 to Rs 4,000 which would help farmers get doubled the amount of loan against their land value.
  • A committee under supervision of Federal Minister for National Food Security & Research has been set up which would workout the ways to increase per acre yield and reduction of agriculture inputs.

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