KARACHI: Pakistan needs substantial investment in the agricultural sector, which calls for empowering farmers, investing in modern harvesters and promoting crop insurance, former finance minister Dr Miftha Ismail said on Tuesday.
During a talk on ‘Pakistan’s Economic Outlook: Challenges and Opportunities’ at the Institute of Business Management (IoBM), Ismail emphasised the necessity for a comprehensive understanding of agricultural economics, urging stakeholders to “think like a farmer” to foster growth and enhance productivity in this critical sector.
He made these remarks following the decision to tax agricultural income across Pakistan, which was implemented with the passage of bills by the Sindh and Balochistan assemblies on Monday. Recently, the Punjab and Khyber Pakhtunkhwa assemblies also unanimously approved agricultural income tax bills, turning them into laws.
He highlighted gross domestic product (GDP) as the most significant indicator of economic growth while stressing that inflation has exacerbated the economic divide, widening the gap between the rich and poor. He further pointed out that rising tax rates and inflation are putting increasing pressure on the disposable income of Pakistanis.
He elaborated on the principles of tax equity, explaining the need for both horizontal and vertical equity, ensuring that individuals pay taxes in proportion to their income levels. The former minister also addressed the challenges related to foreign investment in Pakistan, noting that most foreign investment is directed towards companies focused on selling products or services. He criticised the flow of foreign direct investment (FDI) through informal channels like Hawala rather than fostering industries that could help Pakistan manufacture goods and boost exports.
He called on local investors to take an active role in Pakistan’s economic development and highlighted the failure of the governance system, which has exacerbated socio-economic issues in the country. Ismail pointed out that Pakistan has the highest number of out-of-school children in the world, with over 26 million children lacking access to education. Furthermore, Ismail also discussed the stark class divisions in Pakistan, stating that the elite class, which constitutes only 1.0 per cent of the population, controls significant power in the country. Meanwhile, the middle class, comprising 9-10 per cent of the population, primarily works in various industries. The remaining 90 per cent of the population struggles with insufficient resources and opportunities.
When asked about his vision for Pakistan’s future, Ismail shared his plans if he were to become prime minister. He proposed working in four key areas: maintaining law and order, providing education, enhancing healthcare and providing civic services. Despite having a budget of Rs12,000 billion, the provinces are still struggling to deliver these essential services. He suggested overhauling the National Finance Commission (NFC) system, decentralising authority and empowering local governments.
