Ministry refuses to write off Balochistan farmers’ loans

Finance Ministry has refused to write off Rs 7.8 billion outstanding agricultural loans against around 12,000 farmers of Balochistan due to financial constraints. The Senate of Pakistan unanimously passed a resolution on November 23, 2016 that in view of the deteriorating condition of agricultural sector due to law and order situation, low water level and excessive electricity loadshedding in Balochistan province, all the outstanding loans against farmers be waived off.

However, the Finance Ministry in a written response told the Senate Standing Committee on Problems of Less Developed Areas that in view of measures taken by the government and financial constraints, further waiver of loans in Balochistan is not possible. The committee met with Muhammad Usman Khan Kakar in the chair here on Wednesday.

Kakar said that Prime Minister Nawaz Sharif had announced Rs 340 billion agriculture package for the whole country but not even one per cent of the package was given to the farmers of Balochistan. The Prime Minister also announced other billions of rupees packages for traders and businessmen, but Balochistan was ignored. "If the government can write off Rs 435 billion of the elite including judges, generals, politicians, etc, why Rs 7.8 billion outstanding loans against the poor farmers cannot be waived," the chairman asked. The principle amount is around Rs 2.5 billion while the rest of the amount is interest on these loans, said the chairman, adding that all the outstanding loans be waived off before the upcoming budget for 2017-18.

Joint Secretary Finance Ministry Zahoor Ahmad said that the recommendations would be conveyed to the top level for implementation but it seems difficult to be implemented before the upcoming budget. The State Bank of Pakistan (SBP) official said that Rs 2.1 billion outstanding against Balochistan farmers were written off during the last ten years, which benefited 14,477 people. It was submitted before the committee that "regarding the waiver of agriculture loans in Balochistan, the banks are commercial entities which price their loan products under a market based mechanism in order to sustain their business. The SBP is of the view that frequent announcements of relief/ waivers in mark-up or principal amount of loan or providing agricultural loans at lower rates promotes default culture and impacts the financial condition of the banks negatively which discourages them to increase their loaning in agriculture and rural sector. The federal government also increased agriculture credit availability to Rs 700 billion for agriculture financing. During July-October 2016, the banks disbursed Rs 147.0 billion agriculture loans which are 21 per cent of the annual target of Rs 700 billion."

The committee expressed dissatisfaction over the briefing given by the Ministry of Planning with respect to budget allocation and releases to the less developed areas. The committee observed that of the 106 projects for Balochistan province, work on 56 has not yet been started. The parliamentarians further blamed the federal government for ignoring the less developed areas while saying that only 27 per cent of the PSDP was earmarked against the demand of 65 per cent.

The acting secretary Planning Division informed the committee that after 18th Amendment, development at local level is the responsibility of the provincial government. However, despite this development of less developed areas is the priority of the present government. In Public Sector Development Programme (PSDP) 2016-17, Rs 280.7 billion are allocated for 228 development projects including Rs 100 billion for temporarily dislocated persons (TDPs) in these areas. The official further said that an increase of Rs 45 billion has been indicated for 2017-18 for the less developed areas.