Smart subsidy by Punjab Govt: a step in right direction.

In Pakistan more than 50% of the farm land is owned by less than 10% of farmers i.e. land holding is concentrated in hands of rich zameendars/agriculturalists. However, the remainder 90% of farmers have very small land holdings, which highlights the significance of small and subsistence farmers in Pakistan's agri-sector employment. In this scenario, the subsidy given by government on urea produced on imported LNG is directly and disproportionately benefitting the large farm owners and zameendars whose agricultural income remains untaxed.

Punjab Agriculture Minister, Malik Nauman Langrial while talking to a select group of journalists disclosed that government plans to unleash revolution in agriculture through launching of Kissan Card. This is a great step in the right direction as this move is aimed at disbursing "targeted subsidy to small farmers". Farmers having up to five acres would get direct subsidy through NRSP on fertilizers. As many as five million farmers will benefit in next two years.

Scope to Kissan Card will be extended to farmers upto 12.5 acres of landholding. Government will ensure provision of timely payments to farmers for buying various agriculture inputs. Similar scheme was introduced by Government of Punjab in February 2017 on phosphorus and potassic fertilizers in order to promote the balanced use of fertilizers and ensure that the subsidy trickles down to small and subsistence farmers. That scheme was very successful and resulted in improved usage of balanced fertilizers in Pakistan.

Currently the government is bearing Rs38 billion per annum on account of subsidized RLNG to fertilizer plants. Additionally, the government also decided to import 100,000 of urea for an approximate amount of Rs6 billion, raising the total cost of these adverse decisions on the national exchequer to Rs44 billion (US$275 million). Along with the above, the subsidy to sell imported LNG at cheaper rate annually amounts to Rs21 billion.

Had the efforts been deployed to provide much bigger 'smart' subsidies earlier, the subsistence farmers would have benefited significantly at much reduced cost to the country. Small scale farmers, with less than 5 acres of land can potentially get urea...