ISLAMABAD-The Economic Coordination Committee (ECC) of the Cabinet on Monday has decided to form a committee to thoroughly evaluate the proposal for the increase in the Minimum Support Price (MSP) of wheat for the 2020-21 crops.

Adviser to the Prime Minister on Finance Dr. Abdul Hafeez Shaikh chaired the meeting of the ECC at the Cabinet Division. The ECC had a detailed discussion on the MSP of Wheat. The Ministry of National Food Security and Research (MoNFSR) briefed the ECC on different estimates gathered from Punjab, KP, Balcohistan and the Federal Capital. During the discussion, it also came to the fore that there was a need to increase the MSP to support the farmer and to grow enough quantities in the next sowing season. The forum also discussed the need to rationalise the prices of inputs for making them more affordable to the farmers, to support the rural economy through various measures and to increase the supply of wheat in the market so that the flour prices are brought down. It was also discussed to have a better system for gathering data regarding the agriculture sector.

The ECC decided to form a committee with Syed Fakhar Imam, Dr. Hafeez Shaikh, Dr. Ishrat Hussain, Dr. Waqar Masood, Nadeem Baber, Abdul Razzaq Dawood, Asad Umar and Khusroo Bakhtiar as members, to thoroughly evaluate the proposal for the increase in the MSP of wheat for the 2020-21 crops. The committee shall also prepare a proposal on subsidy on fertilizers mainly DAP which may be offered as a part of the package for the farmers so that their input cost is reasonable/ reduced. It was also decided that the provinces should increase the wheat releases to stabilise/reduce the price of flour in the market. It was decided that the local governments will also be directed to specially monitor the prices of wheat and flour in the markets so that its prices may not be allowed to escalate for the common man. The committee shall present its proposal in the next meeting of ECC.

In last week, the MoNFSR has proposed to increase the support wheat price by 25 per cent. The ministry in its summary has proposed for increasing support price from the previous Rs1,400 to Rs1,745 per 40 kg for the upcoming wheat crops. However, some members of the ECC had opposed the increase due to its inflationary impact in the country. They were of the view that inflation is already on the higher side and increasing minimum support price for wheat by 25 per cent would further fuel the inflation rate. The flour prices had increased by almost 55 to 60 per cent over the past year. The flour prices increased even the government had been allowing tax- and duty-free wheat imports both through public and private sectors. The wheat flour prices are continuously increasing despite the government is importing wheat from other countries.

The ECC has approved in principle, the procedure for registration under the concessionary regime of electricity, RLNG and gas under the export oriented sectors (erstwhile zero-rated sectors) with instructions to ensure better targeting of the recipients of this subsidy. The ECC decided that the previous list of manufacturers or exporters declared zero-rated by FBR (under condition (xii) of the SRO 1125) may be adopted in export oriented sectors. FBR may register new manufacturers or exporters of five export oriented sectors (erstwhile five zero rated sectors), in accordance with past precedents of STGO-117, under Commerce Division’s O.M No.1 (18)/2019 in manner specified by FBR. FBR, Petroleum Division and Power Division may formulate periodic rechecking/monitoring/withdrawal strategy for previous and newly registered units along with procedure to penalize in case of misrepresentation and misuse.