Agricultural Input Subsidies in Pakistan: Nature and Impact

Pakistan development review 01/1995; 34(4):711-722.
Source: RePEc

ABSTRACT Pakistan has a history of subsidising agricultural inputs. Although none of the agricultural inputs were subsidised during the early 1950s, the process was initiated in the second half of the decade by subsidising chemical fertilisers in order to popularise their use [Niaz (1984)]. The list of subsidised inputs and the rate structure of the subsidies were expanded considerably throughout the Sixties. Towards the end of the Sixties, it was noted that almost all the agricultural inputs including fertilisers, insecticides, seeds, irrigation water, tubewell installations, and the operation and purchase of tractors and tractor-related equipment were subsidised in one form or another [Aresvik (1967) and Kuhnen (1989)]. In the 1970s, some curtailment of subsidies occurred as a result of input price increases which followed the worldwide recession, a major oil shock, the credit crunch, the war with India, and the consequent steep devaluation of Pakistani Rupee [Chaudhry (1982)]. Although the subsidies had survived the onslaught of the Seventies and tended to persist on most inputs, the government became totally committed to their removal beginning with the 1980s, under pressures from the IMF and the World Bank [Government of Pakistan (1980)]. As a consequence, there was a total withdrawal of subsidy from seeds, insecticides, tubewells, and tractors. A phased-out withdrawal of fertiliser subsidy, culminating in 1984-85 in the case of nitrogenous fertilisers and in 1989-90 in the case of phosphatic and potash fertilisers, was also to be undertaken [World Bank (1986)]. The purpose of the present paper is to highlight the progress of withdrawal of input subsidies in Pakistan, to study the nature of the input subsidies and possibly analyse the impact of the withdrawal of subsidies on the farm sector. Needless to add that the study is also intended to make policy recommendations on the various aspects of subsidy withdrawal.

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    ABSTRACT: The main objective of this paper has been to review Pakistan’s historical experience in agricultural development in terms of growth, income distribution, and rural poverty. While the long-term growth rates between 1949-50 and 1994-95 were satisfactory, the variations around the average have been rather too large over the various decades. Beginning with a stagnating sector of the 1950s, agriculture witnessed record growth rates during the Sixties. This was followed by the lowest growth rates of the early Seventies, and acceleration in the second half of the Seventies. The experience since 1979-80 has been mixed, but the growth rates have been rather low through the Eighties and the Nineties. The trends in income distribution and poverty varied directly in relation to the agricultural growth rates, especially when they were in excess of the threshold level of 4.5–5.0 percent per annum. In general, a growth rate of 5.0 percent or higher has induced positive changes in income distribution and poverty. In view of this positive association, the pursuit of a high growth policy in agriculture should guide Pakistan’s future development strategy. The efficiency of resource use, a greater dependence on modern technologies, and a minimisation of government intervention in the market mechanism are the essential pillars of the high growth strategy.
    Pakistan development review 01/1997; 36(4):593-612.
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    ABSTRACT: The study examines movements over time in key factors influencing food security in South Asia. Country level and regional level food security indices (FSI) were constructed to track progress in achieving food security keeping in view its availability, stability, access, and nutritional status dimensions. The results show that despite an overall increase in food production in SAARC countries, there has been no significant improvement in food security in the region. The lack of progress in improving food security and reducing hunger and malnutrition in some countries shows that their economic structure in terms of asset and income distribution; low investment in health, education, and agricultural R&D; and slow progress in HDI and gender disparities may be key factors. The study stresses upon the need for regional collaboration for ensuring food security and early solutions of issues that hurdle the initiation or limit the benefits of collaborated programmes.


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