Prime Minister has reversed the decision to withdraw subsidy on fertilizers after the intense criticism by opposition.
The government had allocated Rs 28 billion in cash subsidy on fertilizer sales, but it was discontinued earlier in the week after the entire amount was consumed.
Prime Minister said on Friday, “the agricultural sector was the backbone of economy that contributed to the country’s GDP growth, therefore, the sector should be facilitated. Provinces and the federal government will equally share the subsidy.”
However, the government had not eliminated the General Sales Tax (GST) subsidy on fertilizer amounting to Rs.184 per 50 kg bag of urea. Under this subsidy, it has diminished sales tax from 17% to 5%.
On Thursday former president Asif Ali Zardari issued a statement that government will only issue the subsidy for the farmers of Punjab, a step that was likely to affect the inter-provincial harmony.
“The government is playing with fire as such measures will create provincial rifts and disharmony,” Mr Zardari said. In addition he said ” As a result of the decision, the share of the agriculture sector in national economy and its capacity to drive growth and development in the counrty would be affected drastically.
Simultaneously, Minister of Food Security and Research Sikandar Hayat Bosan told the Senate on Thursday that the Punjab Government had called for continuation of the subsidy.
Further it is told that the government had also withdrawn cash subsidy of Rs 300 per bag for di-ammonium phosphate (DAP). The DAP price had gone down from Rs 2,800 to Rs 2,500 per bag after the announcement of the subsidy.
In financial year 2016, the performance of the agricultural sector, as a whole, remained discouraging as it recorded a negative growth of 0.19% against 2.53% growth a year earlier.