Lahore - An emergency meeting of management committee of Paapam was held here on Wednesday to discuss the tractor subsidy scheme announced by the Sindh government.

The committee deliberated in details the pros and cons of such schemes and it was unanimously agreed that historically such schemes had been harmful for the industry.

Talking to this scribe, Paapam Chairman Mumshad Ali explained that tractor subsidy schemes had had serious transparency issues in the past, in which level-playing field was not provided to all the assemblers of tractors “Besides this, such schemes are money making opportunity for the influential people, who end up winning the balloting for such schemes and later sell the scheme tractors in the open market at lower rates,” he added.

“Added to that, such schemes disrupt the natural sale cycle of the industry. Tractor sales drop at the time of announcement of such schemes in the provincial budgets as was witnessed in June last year, followed by a drop in sales before the official launch of such schemes,” he explained.

He said such schemes were short term measures to gain political millage and resulted in a temporary boom for the industry, followed by a long bust, resulting in erratic demand patterns, which affected quality of the tractors and also caused losses to the tractor part supply chain.

Ali opined that subsidy schemes should be replaced with low mark up 5-year loans for the farmers, which will make tractors affordable for the farmers and give a long-term growth to the industry.

He asked the political leadership of the provinces to compare the tractor growth in neighbouring India over the last five years with the demand pattern for tractors in Pakistan.

“Tractor sales have halved in Pakistan, since 2011, whereas in India they are on a steady rise due to coherent and stable policies,” he noted.

He asked the government to put prudent policies in place.

“The federal government levies GST on tractors which has changed several times in the last five years, while the provincial governments subsidises these and leave these at the mercy of markets,” he added.

Agricultural ministries are devolved to the provinces while ztbl remains an extension of the federal finance ministry with meager funding.

Government must address the tractor issue on long term basis keeping in view the shortage of farm mechanization in the country when compared with other countries in the region and the world. Long term view must be taken and short term measures discontinued added Ali.