By Ariba Shahid
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ne of the most annoying moments in the field of business journalism is when different industries whinge to journalists about everything that is wrong and how the government needs to help them. The whiny, entitled, nature of these industrialists demanding that the government bail out their sector whether it is leather, or fabrics, or metal, or chemicals is so predictable yet so nauseasting that it is stranger when a subsidy, or a package, or some form or relief does not come up in an interview. This is not, of course, to say that subsidies are always bad. While most businesses need to stop complaining and start taking more responsibility, there are classes of people who desperately need and deserve subsidies
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from the government. We are speaking here specifically of farmers. Most of the times, when subsidies are looked at critically, the opposition to them is that tax payer money is being used to provide relief to some sectors or organizations. This money could be used elsewhere such as poverty elimination programs, development expenditure, or any place else by the government. One subsidy that always is in the news cycles is fertilizers - more specifically urea. The subsidy on urea is provided in different ways. The government, for example, provides subsidised gas to fertilizer companies so that they can produce cheap urea and provide it to farmers. Now, this subsidy is being provided to fertilizer manufacturers, but eventually it affects farmers that end up buying cheaper urea from these fertilizer manufacturers. However, there are different ways in which this subsidy can be provided that more directly benefits the farmers rather than the fertilizer companies -
which should be the government’s target. There are gains associated with the subsidies in the fertilizer sector, making subsidies in the sector a public policy tool. In the past, governments have subsidized production, import, and distribution; and have also withdrawn the support only to revert back when prices rose. In short, one could say that this policy tool also works as a political tool to garner support from the farming population (which also happens to employ a significant proportion of Pakistanis), but also helps ensure food security.
The size of the agricultural sector
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akistan is an agrarian economy. This little factoid is drilled into our heads from our earliest school days. It is plastered front and center in social studies books, and is most likely the first thing you learn about
