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Benazir Tractor Scheme may worsen supply-demand gap
Thursday, January-01-2009

LAHORE (January 01 2009): Pakistan Peoples Party (PPP) is launching Benazir Tractor Scheme with blithe ignorance of situation on ground, as this decision would put more pressure on the already deteriorating supply-demand gap, especially in the presence of Green Tractor Scheme launched by Pakistan Muslim League (Nawaz) in Punjab.

This situation would result in the monopoly of local tractor manufacturers, already siphoning off billions of rupees per annum from Zarai Taraqiati Bank Ltd (ZTBL) - sharing alone the burden of about 12000 tractors annually - and the Bank of Punjab (BoP), the main financial sources for the extension of such pro-poor subsidised schemes.

These banks, as a matter of fact, bear 90 percent of the cost of tractors through extending loans to farmers on easy terms while 10 percent of the equity comes from farmers themselves under the schemes - an arrangement opening up a lucrative window of corruption for elements from among bank employees and the tractor manufacturers.

It may be noted that PPP had also introduced Awami Tractor Scheme way back in 1994, resulting in a string of investigations and arm-twisting of tractor suppliers by Saif-ur-Rehman of Mian Nawaz Sharif and National Accountability Bureau of President General Pervez Musharraf.

Now, it is learnt on good authority that the Ministry of Food, Agriculture and Livestock (Minfal) has again convened a meeting of tractor manufacturers to discuss Benazir Tractor Scheme, to be launched by President Asif Ali Zardari by end January 2009.

"The coalition partners of present ruling set-up are trying to sell old wine in new bottle," said one critic of the scheme, adding that "this loot sale of tractors would result in more compromises on quality and delivery of tractors ahead by the manufacturers."

The leading farmers organisations such as Pakistan Kisan Movement, Chamber of Agriculture, Agri Forum and Anjuman-e-Kashtkaran have also mentioned with grave concern that the delivery of tractors with a price tag ranging between Rs 469,000 to Rs 850,000 is being delayed for a period consisting of six to eight months under Green Tractor Scheme and entry of Benazir Tractor Scheme would double the delaying period to 13 months at least.

According to these circles, inefficiencies have crept in the production systems of tractor manufacturers due to the government-sponsored tractor schemes. The tractor manufacturers are least bothered about the manufacturing cost and the quality of products due to the easy-money phenomenon oozing out of government's love for poor farmers of the country.

"The tractor manufacturers receive tractor price in advance and keep on utilising in it as interest-free working capital throughout the delaying period," said one leading farmer, who had bought 20 tractors a year back and all of them have become redundant due to poor quality. "The automotive industry in fact is running on people's money," he added.

The farmers' circles are of the view that the PPP government should conduct an independent buyers' survey to assess the gravity of the situation and a complaint cell should be set up to check the monopolistic attitude of tractor manufacturers.

Meanwhile, the market sources said that the production lines of leading tractor manufacturers at Sheikhupura Road are designed to produce 12,000 tractors per annum. But heavy demand of tractors, stirred by ill-planned schemes like Green Tractor Scheme and Benazir Tractor Scheme, leaves the tractor manufacturers with no option but to produce double than actual capacity, leading to unbelievable compromises on quality of product.

The market sources further revealed that major tractor manufacturers are running with a backlog of 20,000 tractors on their prior delivery commitments. As per law, the tractor manufacturers are bound to deliver a tractor, against which they have received full payment in advance, within 30 days of the booking of order. However, heavy market demand causes a minimum six to eight months and a maximum 13 months delay in delivery.

A penalty of Rs 150 per day is also imposed on manufacturers, which does not exceed 8 percent per annum against the payment made, and therefore no one from the manufacturers bothers about it.

President Asif Ali Zardari should therefore not rush to the ribbon-cutting ceremony of the scheme before taking corrective measures to ensure timely supply of tractors through local and imported sources on the one hand and plugging the loopholes in financial institutions to check the unbridled corruption on the other, said the stakeholders.

Courtesy Business Recorder

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