GDP (Current US $): $174.8 billion (2010 est.

GDP Growth FY10E: 4.10%

Read more: http://www.gfmag.com/gdp-data-country-reports/204-pakistan-

gdp-country-report.html#ixzz1KUzpqm8a

Agriculture sector in Pakistan

AGRICULTURE SECTOR Due to water shortages, decline in the availability of certified
seeds and uncertain outlook of rice and sugarcane, unfortunately, the agriculture sector
only recorded a growth of 2% during the fiscal year 2010. Fortunately, livestock, which
constitutes 50% weight in agriculture, recorded positive growth but there was a
marginally negative growth in crops. Consequently, the full potential of agriculture
sector, which hopefully is up to 9-10% could not be achieved. During the fiscal year
2011, there will be a decline in cotton and sugar-cane and therefore, the probability is that
agriculture is not likely to register a significant growth as a contribution to GDP, which
would be a negative factor affecting the increase in GDP during Fiscal Year 2011.
However, minor crops e.g. fruits, vegetables, spices and food items registered high
increase in prices due to consequential effects of floods. It is humbly suggested that agro-
based industries should be established for tomato paste, onion syrup bottling and other
items of daily use so that the inter-season shortages can be reduced to the most minimum

Role of financial Institutions in Agriculture Sector

Which banks are authorized for providing agricultural credit to farmers/growers?

All banks can provide agricultural credit to Farmers / growers. SBP does not restrain any
bank from providing agricultural credit. However, under the Agricultural Credit Scheme
indicative targets are given to 21 banks on annual basis. These include; two specialized
banks (ZTBL & PPCBL), five major commercial banks (ABL, HBL, MCB, NBP &
UBL) and 14 domestic private commercial banks; 1) Askari Com. Bank, 2) Bank Al-
Habib, 3) Bank Al-Falah , 4) My Bank, 5) Faysal Bank, 6) Habib Metropolitan Bank, 7)
PICIC Com. Bank, 8) KASB Bank, 9) Prime Com. Bank , 10) Saudi Pak Com. Bank, 11)
Soneri Bank, 12) Bank of Khyber, 13) Bank of Punjab and 14)Standard Chartered Bank
(Pakistan).

Who is eligible for agricultural credit from the banks?

Any individual (farmers/livestock farmers, fishermen, fish farmers), corporate firms,

cooperative societies/self help groups under-taking livestock related activities, fish
catching/ processing /packing companies and fish exporters having sufficient knowledge
and relevant experience are eligible to draw agricultural credit from banks.

Are the traders and intermediaries engaged in trading/processing of agricultural

Commodities eligible for agricultural credit?

Loans to entities exclusively engaged in processing, packaging and marketing of

agricultural produce shall not fall under agricultural financing and would be covered
under commercial or SME financing. However, agricultural financing can be extended to
entities (including corporate farms, partnerships and individuals) engaged in farming
activity as well as processing, packaging and marketing of mainly their own agricultural
produce, provided 75% of the agriculture produce being processed, packaged and
marketed is being produced by the abovementioned entities themselves.

For what purposes the banks provide Agricultural Credit?

Agricultural credit is provided by banks for complete value chain of activities such as
production/crop loans i.e. in-puts (seed, fertilizer, & pesticides etc.), development loans
(tractors &tube wells, agricultural machinery / equipments / implements etc.), corporate
farming, marketing, cold storage (god owns) on farm & off farm, silos, processing of
crops (other than major crops), fruits & vegetables, grading, polishing, packing,
transportation and exports of agricultural goods etc.

Agricultural credit is also available for non-farm sector such as poultry, livestock, dairy
Farming, forestry and fisheries, apiculture, sericulture, floriculture, horticulture, etc.

There is no provision of financing for procurement of fruits/crops under the list of

eligible items for agricultural credit such lending would be covered under commercial or
SME financing

SBP role

Our farming community is generally unaware of different agricultural loan

schemes/products. What efforts have been made by SBP for awareness of the
farming community?

For awareness building of the farmers, SBP has published pamphlets, brochures/book-lets
containing information about different agricultural credit schemes/products in Urdu and
English as well as in all regional languages and these publications have been distributed
to the stakeholders including farming community.

Besides, SBP has been arranging special outreach training programs since 2003 in
different cities of Pakistan for the banks, Agriculturists, Nazims, Chambers of
Agriculture and representatives of Farmers’ Associations. SBP officials along with
banks’ representatives also undertake field visits across the country especially to make
the farmers aware of loaning facilities available and various schemes & new products of
banks
Leasing facility

Banks are vigorously going for car leasing business. Can’t such facility be extended
to farming / rural community by providing agricultural machines/equipments /
implements including tractor on leasing, hiring, rental basis?

SBP has already allowed banks to extend leasing facilities to the farmers under the
scheme for tube wells, tractors, harvesters etc. These machines/equipments / implements
are also available to the farmers on hiring, leasing and rental basis through Leasing
Companies.

Is there any limit for agriculture financing?

No, there is no limit on agricultural loans; however, the loan limit amount is assessed by
the
ACO/branch manager on the basis of financing appraisal or feasibility report, etc.
Is mark-up rate fixed by SBP on agricultural loans?

SBP does not fix any maximum/minimum mark-up rate to be charged on agricultural
loans. Banks’ mark-up is based on their cost structure and risk profile of the borrowers
and the sector. However, for benchmarking, Karachi inter-bank Offered Rate (KIBOR) is
used by banks for the purpose.

http://www.scribd.com/doc/24029996/23/Role-of-financial-Institutions-in-Agriculture-
Sector
State of Pak economy

Posted on October 31, 2010 by Raheem

PROFESSOR DR KHAWAJA AMJAD SAEED

ARTICLE (October 31, 2010) : The success story of a country depends upon
accomplishments on four fronts namely, Political (strong democratic set up for the well-
being of the people of the country), economic (socio-economic development with
prosperity across the board), social (elimination of social evils and ensuring social
stabilisation with peace and harmony in the country) and technology (institutional
framework through a breakthrough with innovation and invention as logistical support to
all-round development of the country).

However, this piece looks at the broad framework focusing on economy of Pakistan.
Recently, the Annual Report of State Bank of Pakistan for 2009-10 has been released. It
presents a forthright analysis of the state of affairs of the economy of Pakistan. It
generates food for thought and provides insights for forward thinking.

Along with the Annual Federal Budget, the Government of Pakistan publishes Pakistan
Economy Survey on an annual basis. Since the annual budget is announced in the month
of June, the data included in it is generally released nine months ending March 2010.
However, the Annual Report of State Bank of Pakistan is generally released in the month
of October and contains data upto 30th June of every year. It is a matter of great pleasure
to note that the above report has recently been released in two volumes. The first volume
contains descriptive material and the second volume contains statistical data. In the light
of information released in the above report and based on other sources, this piece has
been developed with a view to evaluating the economy of Pakistan in respect of various
accomplishments during the year 2009-2010 and the challenges which Pakistan faces on
the economic front in the future.

GDP REVIEW As against the GDP growth of 1.2% during the Fiscal Year (FY) 2009,
GDP growth during 2009-10 was recorded at 4.1%. However, the target for GDP growth
for 2010-11 was hopefully forecasted at 4.5%. To our misfortune, colossal losses resulted
from the unprecedented floods which hit Pakistan with effect from July 26, 2010. By
now, the devastating floods are over. In this backdrop, all kinds of estimates are being
released. Some economists think that GDP growth during the said year is likely to be
around 2%. Some have optimistic views and their opinion is that it can range from 0 –
2%. However, the State Bank of Pakistan in the above report has an optimistic view of
GDP growth in a range of 2 – 3%. If concerted efforts are undertaken by the Government
of Pakistan in particular and by all stakeholders in general, the above forecasted GDP
growth may be possible. With commitment and dedication, full efforts need to be
initiated and unleashed to achieve this coveted goal.
TARGETS FOR THREE YEARS MEDIUM-TERM PLAN As a broad guideline, the
Government of Pakistan released the following indicators along with the annual Federal
Budget FY 2010:

AGRICULTURE SECTOR Due to water shortages, decline in the availability of

certified seeds and uncertain outlook of rice and sugarcane, unfortunately, the agriculture
sector only recorded a growth of 2% during the fiscal year 2010. Fortunately, livestock,
which constitutes 50% weight in agriculture, recorded positive growth but there was a
marginally negative growth in crops. Consequently, the full potential of agriculture
sector, which hopefully is upto 9-10% could not be achieved. During the fiscal year 2011,
there will be a decline in cotton and sugar-cane and therefore, the probability is that
agriculture is not likely to register a significant growth as a contribution to GDP, which
would be a negative factor affecting the increase in GDP during Fiscal Year 2011.
However, minor crops eg fruits, vegetables, spices and food items registered high
increase in prices due to consequential effects of floods. It is humbly suggested that agro-
based industries should be established for tomato paste, onion syrup bottling and other
items of daily use so that the inter-season shortages can be reduced to the most minimum.

INDUSTRIAL SECTOR As against decline in LSM growth during the fiscal year 2009,
it recorded a positive growth of 4.9% during the fiscal year 2010. This was possibly due
to relatively lower inflation, improved prospects of economy and supportive macro-
economic policies. Concurrent to this, SMEs also recorded a positive growth of 7.8%
during the above year. The need of the hour is to divert greater flow of funds to SMEs as
they can greatly contribute as employment driver in the country. This has recorded
sustainable growth in the past, notwithstanding economic shocks.

Fortunately, construction as component of industrial sector recorded an increase of 15.3%

in FY 2010 as compared to a contraction of 11.2% in FY 2009. This was instrumental
due to some supportive efforts of the Government in terms of reduction of duty on
cement sales, decline in the global prices of coal, iron and wood. Happily, the private
sector made a good contribution in this area.

The golden chapter of Pakistan lies in the high performance of mining and quarrying,
which unfortunately registered a decline of 0.2% in FY 2010. This mainly contributed to
lower production of crude oil and coal. However, it is suggested that the democratic
Government of Pakistan should pay special attention to mining and quarrying sector as
all the four provinces of Pakistan, including Azad Kashmir has tremendous hidden
resources which need to be exploited for ensuring rising prosperity of the country. In this
respect, it suggested that a Mineral Policy be announced.

SERVICES SECTOR The services sector constitutes 52% of the GDP of Pakistan.
During FY 2010, it registered a growth of 4.6%. The growth was observed due to
technical and skill-basis services eg telecommunication, software development and in
accounting and finance.
Considerable finances are needed to accelerate the developments of infrastructure in the
country through construction of small and big dams, development of farm to the main
roads for avoiding the wastage of vegetables, strengthening old bridges, ensuring
breakthrough in the insurance sector as an employment driver, a significant decrease in
non-performing loans in the financial sector, allocating greater funds to social sector
(education and health) and extending logistical support for laying a sound foundation for
institutional development of invention, R&D and innovation.

All stakeholders, at home and abroad, may be approached to channelize their funds to
strengthen the foregoing logistical support to help develop laying sound foundation of
infrastructure. Economists believe that if infrastructure is strengthened, economic
development follows and therefore the future augurs well for a prosperous Pakistan.

PRICES Inflation is a big monster. It eats into the vital of the wage basket of lower strata
of economy and fixed salaried group. The present democratic government deserves
appreciation for protecting the wage basket of salaried class for having announced
increase in the salaries through three instalments aggregating to 80%. However, so far
during democratic set-up, total inflation has been 44%. The basic reason for inflation is
considered as an area of improvement in governance so that the artificial shortages are
reduced to most minimum, smuggling is contained at zero level, various malpractices
such as hoarding etc are eliminated and full attention is focused on increasing the supply
side of goods and services to ensure greater flow of goods particularly food supply in the
market.

It is humbly suggested that Sensitive Price Index (SPI), introduced during late Z.A.
Bhutto’s time be given a special attention so that the downtrodden, poverty-stricken and
all those who belong to lower income group are given special and focused attention. This
will enable them to meet their basic needs and stay away from the consequential
disastrous effects of inflation that causes and upsets the kitchen economics.

PUBLIC FINANCE The crying need of today is to accelerate the base of domestic
resource mobilisation efforts in Pakistan. There is a tremendous potential and the
democratic government must inspire the people of Pakistan by providing leading role in
terms of persuading patriotic citizens of Pakistan to respond to their responsibilities of
paying due and appropriate taxes (direct and indirect) as tremendous potential exists in
the country.

We need to ensure a breakthrough success in this dimension so that our reliance on

foreign loans is reduced, our economic sovereignty is properly restored and our self-
reliance as a guiding inflexible rule is implemented to the advantage of the country.

For this, the political will needs to be demonstrated by reducing rebates, discounts,
allowances, reliefs etc allowable in the Second Schedule of the Income Tax Ordinance,
2001 so that as against 2.3 million people to file Income Tax Return during 2010, the
untapped potential of around ten (10) million and above be brought into the net of the
income tax.
If this goal is achieved, public finances will be strengthened, reliance on foreign
assistance and domestic loans will be reduced substantially and a new era of self-reliance
will dawn in Pakistan to the bouncing pleasure of the masses of the country.

EXTERNAL SECTOR The prosperity chapter of Pakistan can be seen as a lesson from
Far Eastern countries, which successfully followed export-led growth. As against a total
population of 185 million, we have still to cross the threshold of annual exports to the
extent of US $20 billion. Potential exists in the country in setting our house in order.

A breakthrough approach is suggested whereby export processing zones may be

established in every divisional headquarter in all the four provinces and expatriates of
Pakistan are motivated and encouraged to come back to Pakistan and establish industries
for exports in the above Special Export Processing Zones.

All hurdles and roadblocks in this respect should be immediately removed and a
courageous effort by the Government of Pakistan should accept this challenge and
Pakistan will see a major increase in the export of our country and this will also help in
reducing the pressure on the foreign exchange rate, which is now around Rs 87 to one US
dollar as compared to Rs 61 per one US Dollar in January 2008.

CONCLUSION It is our earnest desire to see a new economic dawn of Pakistan where
basic needs of the people are met, prosperity era ushers in across-the-board and the
purpose for which Pakistan was born on August 14, 1947 is accomplished by evolving
socio-economic system based on Quran and Sunnah to strengthen the Islamic ideological
front of the country. This will enable to earn high degree of respect in the comity of the
nations. No doubt, challenges are big but we ought to accept these challenges and achieve
the goals.

budget 2010-11
ISLAMABAD: The government has entirely ignored two most important sectors of the
economy, agriculture and industries, and announced no visible incentives in the federal
budget 2010-11 in this regard.

It is worth mentioning that in Pakistan, there are about 88 per cent farmers having less
than 12.5 acres of land, while other 12 per cent are big farmers, holding more than that.
In the budget, the government announced no subsidy on agriculture inputs, which could
also affect the sector’s production next year.

The agriculture sector is once again exempted from tax, as there are influential
agriculture lobbies, both inside and outside the government machinery, who pushed the
government to exempt the politically sensitive sector from taxes. During the last 62 years,
no body has dared to impose taxes on the agriculture sector because of the strong lobbies
in the country.

Keeping the sector untaxed indicates that 22 percent of the GDP would still be out of the
tax net and big farmers earning billions of rupees ìgreen incomeî would contribute zero to
the country’s tax revenues the next year.