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Why the Indus river system is truly Pakistan's economic 'jugular vein'

With India keeping the Indus Waters Treaty in abeyance, Pakistan's agricultural sector, the backbone of its economy, faces uncertainty. SANJEEB MUKHERJEE analyses

With India keeping the Indus Waters Treaty in abeyance, Pakistan’s agricultural sector, the backbone of its economy, faces uncertainty.
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With India keeping the Indus Waters Treaty in abeyance, Pakistan’s agricultural sector, the backbone of its economy, faces uncertainty. (Photo: Bloomberg)

Sanjeeb Mukherjee Delhi

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Even as New Delhi and Islamabad reached an understanding amid conflict, one of the things that still remained in the spotlight was the Indus Waters Treaty (IWT). India had put the treaty, signed between the two countries in 1960, in abeyance after the April 22 terrorist attack in Pahalgam. 
The treaty between India and Pakistan was brokered by the World Bank and was considered one of the most durable trans-boundary water agreements signed anywhere in the world. India, according to the agreement, has rights over the three eastern rivers — Ravi, Beas and Sutlej — in the Indus Basin. Pakistan has partial rights over the remaining three: Indus, Jhelum and Chenab. The three rivers account for almost 80 per cent of the shared basin’s water.  
  India has the right to use the water from Indus, Jhelum and Chenab for hydropower generation and irrigation. It cannot build any structure that diverts or impacts the downstream flow of these three rivers, according to the agreement. For Pakistan, these three rivers are virtually lifelines which not only provide irrigation for much of its cotton and paddy but also large sections of its horticulture production.
  Pakistan’s agriculture
  With a population of over 220 million, Pakistan, according to estimates, is the fifth most populous country in the world.
Agriculture, which contributes around 23 per cent to its gross domestic product (GDP) and employs over 40 per cent of its labour force, remains the backbone of Pakistan’s economy.  
  Textiles, Pakistan’s largest manufacturing and exporting sector, depends on agriculture for cotton, its core raw material. Over 75 per cent of the exports are linked to the farm sector.
  More than 61 per cent of Pakistan’s people reside in rural areas and are largely dependent on crop and livestock productions. Overall, two out of three employed women find work in the agri-food sector.
  Wheat, rice, sugarcane, maize, and cotton along with a host of horticulture crops are among the major crops grown in the country. In 2019-20 according to the official data, Pakistan produced around 27.4 million tonnes of wheat, 9 million tonnes of maize, 8.5 million tonnes of rice, 81 million tonnes of sugarcane, and around 7.04 million bales of cotton (1 bale=175 kgs).
  According to a 2023 World Bank Report, livestock production is a core element of Pakistan’s farming system, especially for smallholders, as an essential source of resilience (savings), nutrition (proteins and lipids from by-products), energy (land preparation and transport), and nutrition transfer to crops (manure).
  However, while the livestock sector contributes about 60 per cent to the agricultural GDP, it receives less than one per cent of public investments.
  In 2019-20, around 44 per cent of its area under irrigation was through canals and tubewells, data shows. Pakistan’s cultivated area was around 23 million hectares of which net sown area was around 16 million. An overwhelming majority of Pakistan’s net-sown area was in the two provinces of Punjab and Sindh.
  The report notes that for the past 50 to 60 years, the agri-food sector has benefited from large and generous public spending and support.
  Both the federal and provincial governments in Pakistan have supported agriculture through a wide variety of instruments ranging from input subsidies, subsidised tariffs on water and electricity for irrigation, and minimum guaranteed prices.
  However, the report also notes that despite extensive support, Pakistan’s agri-food sector underperforms in comparison with peer countries. It said that after big progress during the agricultural reforms, annual agricultural growth rates in Pakistan had slowed from over four per cent between 1970 and 2000 to below three per cent thereafter.
  Between 1991 and 2019, agricultural output per worker grew at an annual rate of 0.7 per cent in Pakistan, significantly below the South Asia average of 2.8 per cent over the same period.
  The average wheat yields in Pakistan are almost half of those in China and 15 per cent lower than in India. Cotton yields in China and Bangladesh are 2.3 and 1.7 times higher than those of Pakistan, respectively. Pakistan’s use of water in agriculture puts it among the 10 per cent worst-performing countries on agricultural water productivity,” the report said.
  It added that the agri-food sector in the country also underperforms when assessed against its own potential, with yields of major crops 1.5 to 4.2 times below the field potential. The report highlights that Pakistan’s public investment in agricultural research was at 0.37 per cent of agricultural GDP in 1996 and has declined to 0. 12 per cent in 2016.
  India, Bangladesh, and Sri Lanka are spending between 0.3 to 0.60 per cent.
  “Most agricultural research expenditures still go to food grains, sugarcane, and cotton, rather than to high-value crops and livestock products, and to developing climate- smart and market-based innovations and improving post-harvest technologies for value-addition,” the report said.
  It added that land distribution in the country remains highly inequitable with 2 per cent of farmers owning 45 per cent of the cultivated land.
  Farmers with less than 2.5 acres of land comprise close to 90 per cent of the farming community.
  “Yet, they receive a limited fraction of the public subsidies, as many subsidies, especially acreage-based ones, primarily benefit  bigger farmers,” the report said.
  Water productivity in Pakistan stands at 130 grams of crop output per cubic meter of water, as compared to 390 grams in India, 800 grams in China, and 1,560 in America. “The economic productivity of water use in agriculture is among the lowest 10 per cent of countries, globally,” the report added.
  Agriculture and soil
  Data shows that a major part of Pakistan being arid to semi-arid, there is a considerable amount of salt in the soil. The rising water dissolves the salts and carries them to the surface and evaporates. The salts are continuously added to the surface soils. The amount of salts on the surface increases as the water table rises. By the time the water table reaches 3.3 meters from the surface, salinity adversely affects the production and yields of crops.
  Agro-climatic conditions
  Dry and humid conditions prevail over most of Pakistan around the year with some areas in the north receiving rainfall above 700mm.
  Most of Balochistan and the major part of the Punjab south of Sahiwal, and Sindh receive rainfall less than 200 mm every year.  North of Sahiwal, the quantum of rainfall gradually goes up while aridity diminishes. However, humid conditions prevail when the rainfall touches 1000 mm per year in the plains and 700 mm per year over the highlands.
  There are two sources of rainfall in Pakistan: the monsoon and the Western Depression. The monsoon rains begin from July to September (Kharif season).
  As the name indicates, The Western Depression enters Pakistan after passing over Iran and Afghanistan, losing moisture on the way. It brings a small amount of rainfall to the western parts from December to March (Rabi season). Broadly, Pakistan follows six major cropping zones: cotton‐wheat, maize‐wheat, rice‐wheat, sugarcane‐ wheat, coarse grain‐wheat, and groundnut‐wheat.   
AGRICULTURE IN A NUTSHELL
  23% Agriculture’s contribution to Pakistan’s GDP. It employs around 40% of its population. Within this, livestock contributes almost 60% to the agricultural GDP 
Two out of three women find work in the agri-food sector 
More than 61% of Pakistan's people reside in rural areas and are largely dependent on crop and livestock production
  Major crops: Wheat, rice, sugarcane, maize, and cotton, along with a host of horticulture crops