In the newly announced federal budget 2025–26, the Pakistani government has proposed to continue sales tax exemptions on fertilizers and pesticides, in an attempt to support the agriculture sector, considered the backbone of the economy. Despite this relief, key stakeholders have voiced dissatisfaction, saying many promises remain unfulfilled.
During his budget speech in Parliament, Finance Minister Muhammad Aurangzeb acknowledged that agriculture contributes 24% to Pakistan’s GDP. However, he admitted the sector underperformed last year and did not meet its targets. He emphasized that the federal government is committed to helping agriculture stand on its feet again.
Aurangzeb revealed that although agriculture is a provincial subject, Prime Minister Shehbaz Sharif has formed a national committee to review and recommend long-term reforms for the sector.
He also shared that agricultural lending increased from Rs1.785 trillion last year to over Rs2.066 trillion this year during the same 10-month period. Under the Clean Financing Facility, farmers will soon be able to receive unsecured loans of up to Rs100,000 directly into their individual digital accounts.
In a forward-looking move, the government plans to launch a National Seeds and Development Authority to ensure climate-resilient seed quality and crop standards. Additionally, Rs4 billion has been allocated to support 10 ongoing and 5 new agricultural development schemes.
Under the Green Pakistan Program, initiatives will focus on improving crop yields, bridging output gaps, and enhancing market access for farmers. The government has also begun sending 1,000 agricultural graduates to China for modern farming training—300 have already departed.
However, farmer groups remain unconvinced. Khalid Khokhar, president of the Pakistan Kisan Ittehad, criticized the budget for lacking real support. He noted that last year’s agricultural growth was just 0.56%, much of which came from livestock. He questioned how the government expects to achieve 4.5% growth without real financial backing or structural support.
“Improving seed quality is just a slogan—where’s the funding to make it real?” Khokhar asked. He further criticized the government’s withdrawal from procurement responsibilities, especially wheat, leaving the field open for hoarders and middlemen.
An official from the Punjab government echoed this frustration, calling the federal government “insensitive.” He pointed out that commitments to reduce duties on machinery, stabilize fertilizer prices, and promote R&D have largely been ignored. Nonetheless, he welcomed the GST exemption on two critical inputs as a small but positive step.