The farming sector is in trouble so are the industries associated with it. Cotton yield has reached the lowest ebb during the current fiscal year and the country has to turn towards India to import cotton and run textile industry. The tractor industry is also in trouble due to crisis in the farming sector. According to newspaper reports, contribution of tax from tractor industry was Rs 6 billion last year but it is expected to drop below Rs 2 billion this year due to drying up demand for tractors and their spare parts. At least Rs 4 billion drop in tax collection indicate how the industry is fighting for its survival.
According to an official of the Pakistan Association of Automotive Parts and Accessories Manufacturers, the ongoing crisis will take its toll on the tractors industry, causing a loss of 67 percent in terms of tax revenue. The industrial sector in the world is heading forward, but it is in back gear in this country. Pakistan has developed tractor industry in the region and new demands can be created if the government and the private sector go in tandem. African countries can be a huge market for Pakistani tractors if little efforts are made. At least the country has to excel in one sector to build the economy on modern lines. A workforce of at least 50,000 people is engaged in this industry which produces 500 units per year. The number of people indirectly involved in the business is almost half a million but loss of crops and falling prices of yields have reduced purchasing power of the farmer community. Consequently, a drop in sale has lowered tractor production. The federal government has recently announced Kisan package but no funds have been allocated for the farmers to purchase tractors. The subsidy schemes announced by the Punjab and Sindh governments have either been sidelined or cancelled. Unfortunately, there is a little coordination between the federal and the provincial governments on the matter of farming community.
Experts believe inconsistent and short-term strategies of the government can be blamed for the ongoing crisis. The government frequently changes tax laws while loans are extended to farmers at very high markup rate, plunging the farmers into more chaos. The tractor subsidy schemes are also marred by corruption, causing more troubles than any good to the industry. The government will have to launch long term policies as well as loans for the farmers at zero markup rates. The government can earn its profit in the shape of taxes.