2018

## Union Budget Analysis Of Major Demands

# 2018-19

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## Table Of Contents

 
Defence ........................................................................................................ 3 Food and Public Distribution ........................................................................ 9 Rural Development .................................................................................... 21 Home Affairs .............................................................................................. 31 Human Resource Development ................................................................. 39 Road Transport and Highways .................................................................. 55 Agriculture and Farmers' Welfare .............................................................. 61 Railways ..................................................................................................... 69 Health and Family Welfare ......................................................................... 76 Housing and Urban Affairs ......................................................................... 92 Petroleum and Natural Gas ....................................................................... 98 Drinking Water and Sanitation ................................................................. 109 
 

## Overview

All central government expenditure is authorised through the Union Budget every year.  The Union Budget 2018-19 
which was presented on February 1, 2018 proposes an expenditure of Rs 24,42,213 crore for the year.  This amount will be funded through receipts (excluding borrowings) of Rs 18,17,937 crore and borrowings of Rs 6,24,276 crore. 

% change 
Budgeted 
(RE 2017-18 to 
  
Actuals 
2016-17 
2017-18 
Revised 
2017-18 
Budgeted 
2018-19 
BE 2018-19) 
Revenue Expenditure 
16,90,584 
18,36,934 
19,44,305 
21,41,772 
10.2% 
Capital Expenditure 
2,84,610 
3,09,801 
2,73,445 
3,00,441 
9.9% 
Total Expenditure 
19,75,194 
21,46,735 
22,17,750 
24,42,213 
10.1% 
Revenue Receipts 
13,74,203 
15,15,771 
15,05,428 
17,25,738 
14.6% 
Capital Receipts 
65,373 
84,432 
1,17,473 
92,199 
-21.5% 
Recoveries of Loans 
17,630 
11,933 
17,473 
12,199 
-30.2% 
Other receipts (including disinvestments) 
47,743 
72,500 
1,00,000 
80,000 
-20.0% 
Total Receipts (without borrowings) 
14,39,576 
16,00,204 
16,22,901 
18,17,937 
12.0% 
Revenue Deficit 
3,16,381 
3,21,163 
4,38,877 
4,16,034 
-5.2% 
% of GDP 
2.1 
1.9 
2.6 
2.2 
 
Fiscal Deficit 
5,35,618 
5,46,531 
5,94,849 
6,24,276 
4.9% 
% of GDP 
3.5 
3.2 
3.5 
3.3 
 
Primary Deficit 
54,904 
23,454 
64,006 
48,481 
-24.3% 
% of GDP 
0.4 
0.1 
0.4 
0.3 
  

Note: Budgeted estimates (BE) are budget allocations announced at the beginning of each financial year.  Revised Estimates (RE) are estimates of projected amounts of expenditure/receipts until the end of the financial year.  Actual amounts are audited accounts of expenditure and receipts in a year. Sources: Union Budget 2018-19, Budget at a Glance; PRS.  
Article 113(2) and 114 of the Constitution require all expenditure other than charged expenditure to be submitted in the form of Demand for Grants to Lok Sabha.  After Lok Sabha authorises these demands, an appropriation Bill is required to be introduced and passed to permit expenditure out of the Consolidated Fund of India. Post the introduction of the Union Budget 2018-19, all Demand for Grants have been referred to respective Departmentally Related Standing Committees for detailed examination.  Six ministries accounting for 10.2% of the Budget have been selected for detailed discussion in Lok Sabha.  These six ministries are: (i) Railways, (ii) 
Agriculture and Farmers Welfare, (iii) Social Justice and Empowerment, (iv) Health and Family Welfare, (v) Youth Affairs and Sports, and (vi) Road Transport and Highways. Demands for all other ministries will be guillotined, i.e., put to vote without discussion. 

## Expenditure By Ministries

The ministries with the 13 highest allocations account for 54% of the estimated total expenditure in 2018-19.  Of these, the Ministry of Defence has the highest allocation in 2018-19, at Rs 4,04,365 crore (including pensions).  It accounts for 17% of the total budgeted expenditure.  Other Ministries with high allocation include: (i) Ministry of Consumer Affairs, Food and Public Distribution, (ii) Rural Development, (iii) Home Affairs, and (iv) Human Resource Development.   

% change 
Budgeted 
Budgeted 
 
Actuals 
2016-17 
2017-18 
Revised 
2017-18 
2018-19 
(RE 2017-18 to 
BE 2018-19) 
Defence 
3,51,550 
3,59,854 
3,74,004 
4,04,365 
8.1% 
Consumer Affairs, Food and Public Distribution 
1,22,399 
1,54,232 
1,49,608 
1,75,944 
17.6% 
Rural Development 
96,728 
1,07,758 
1,10,874 
1,14,915 
3.6% 
Home Affairs 
91,618 
97,187 
1,02,391 
1,07,573 
5.1% 
Human Resource Development 
72,016 
79,686 
81,869 
85,010 
3.8% 
Road Transport and Highways 
52,232 
64,900 
61,000 
71,000 
16.4% 
Chemicals and Fertilisers 
65,529 
70,578 
65,934 
70,587 
7.1% 
Agriculture and Farmers Welfare 
44,500 
51,026 
50,264 
57,600 
14.6% 
Railways 
45,232 
55,000 
41,814 
55,088 
31.7% 
Health and Family Welfare 
38,995 
48,853 
53,294 
54,600 
2.5% 
Housing and Urban Affairs 
36,946 
40,618 
40,754 
41,765 
2.5% 
Communication 
36,269 
36,237 
36,308 
39,551 
8.9% 
Petroleum and Natural Gas 
30,231 
29,158 
33,195 
31,101 
-6.3% 
Others 
8,90,949 
9,51,648 
10,16,442 
11,33,114 
11.5% 
Total Expenditure 
19,75,194 
21,46,735 
22,17,750 
24,42,213 
10.1% 

Note: Expenditure is net of recoveries such as fines, and ticket sales. Sources: Expenditure Budget, Union Budget 2018-19; PRS. 

## Expenditure On Centrally Sponsored Schemes

Several government programs are implemented through schemes by the ministries.  This year's budget has allocations for 28 centrally sponsored schemes amounting to 12.5% of the budget.  The table below shows the allocations to the top 13 schemes accounting for 10.7% of the budget allocation. 

% change  
Scheme 
Actuals  
2016-17 
Budgeted  
2017-18 
Revised  
2017-18 
Budgeted  
2018-19 
(RE 2018-19 to 
BE 2017-18) 
MGNREGS 
48,215 
48,000 
55,000 
55,000 
0.0% 
Pradhan Mantri Awas Yojana (Rural+Urban) 
27,122 
32,000 
33,698 
34,000 
0.9% 
National Health Mission 
22,870 
27,131 
31,292 
30,634 
-2.1% 
Sarva Shiksha Abhiyan 
21,685 
23,500 
23,500 
26,129 
11.2% 
Integrated Child Development Services 
15,893 
20,755 
19,963 
23,088 
15.7% 
Pradhan Mantri Gram Sadak Yojana 
17,923 
19,000 
16,900 
19,000 
12.4% 
Swachh Bharat (Rural+Urban) 
12,619 
16,248 
19,248 
17,843 
-7.3% 
Pradhan Mantri Fasal Bima Yojana 
11,052 
9,000 
10,698 
13,000 
21.5% 
100 Smart Cities Mission + AMRUT 
9,277 
9,000 
8,999 
12,169 
35.2% 
Mid-Day Meal Programme 
9,475 
10,000 
10,000 
10,500 
5.0% 
Krishi Sinchayee Yojana 
5,134 
7,377 
7,392 
9,429 
27.6% 
National Rural Livelihood Mission 
3,158 
4,500 
4,350 
5,750 
32.2% 
Rashtriya Krishi Vikas Yojana 
3,892 
4,750 
3,050 
3,600 
18.0% 

Sources: Expenditure Budget, Union Budget 2018-19; PRS.   
In this document, we take a close look at the allocations made by some of the large ministries.  Further, we analyse the allocation trends over the years and the extent of their utilisation.  We also examine the implementation of various schemes and policies and their resulting outcomes. 

  

## Demand For Grants 2018-19 Analysis Defence

The Ministry of Defence frames policies on defence and security-related matters, and ensure its implementation by the defence services (i.e. Army, Navy and Air Force).  In addition, it is responsible for production establishments such as ordnance factories and defence public sector undertakings, research and development organisations, and ancillary services that assist the defence services, such as the Armed Forces Medical Services.  This note analyses budgetary allocations and expenditure trends in the Ministry.  It also provides insights into key issues affecting the defence sector. 

## Overview Of Finances

In 2018-19, the Ministry of Defence has been allocated Rs 4,04,365 crore (including pensions) for expenditure across the various services, production establishments and research and development organisations.  This forms 16.6% of the central government's budget of 2018-19 and 2.2% of India's estimated GDP.  The allocation to defence Ministry is the highest allocation among all central ministries. 

India's defence budget as a percentage of GDP has declined over the years India's defence budget for 2018-19 continues to be 2.2% of GDP, which is similar to last year.  In the last eight years, defence budget of the country as a proportion of GDP was highest in 2011-12, when it was 2.4% of GDP.  The Standing Committee on Defence in its 2014 report had recommended that India's defence budget should be increased to about 3% of GDP.  This would ensure adequate preparedness of the defence services.1 

| Year             | Defence    |
|------------------|------------|
| expenditure      |            |
| (Rs crore)       |            |
| Share            |            |
| of GDP           |            |
| (%)              |            |
| Share of central |            |
| government       |            |
| budget (%)       |            |
| 2011-12          | 2,13,673   |
| 2012-13          | 2,30,642   |
| 2013-14          | 2,54,133   |
| 2014-15          | 2,85,005   |
| 2015-16          | 2,93,920   |
| 2016-17          | 3,51,550   |
| 2017-18          | 3,74,004   |
| 2018-19          | 4,04,365   |

Note: Figures for 2017-18 and 2018-19 are revised estimates and budget estimates, respectively. Sources: Union Budget Documents; Central Statistics Office; PRS. 

As a share of the total central government budget, the defence budget has been around 16%-18% between 2011-12 and 2018-19.  However, this year the defence budget as a share of central government budget has seen a decline of 0.3%, from 16.9% last year to 16.6% this year. 

According to the Stockholm International Peace 
Research Institute (SIPRI), India ranks fifth among 
countries on defence expenditure (in USD as a % 
of GDP).2  Figure 1 compares India's defence 
expenditure with that of the top seven defence 
spenders (USA, China, Russia, Saudi Arabia, 
France, and UK).  While Saudi Arabia's and 
Russia's defence expenditure as a share of GDP has 
increased, that of USA and UK has decreased.  
While China's defence expenditure as a share of 
GDP has marginally decreased, that of India and 
France has remained unchanged. 

 
Note: Includes expenditure on armed forces, central paramilitary forces, defence ministry and defence pensions. Sources: Trends in World Military Expenditure 2016, Stockholm International Peace Research Institute; PRS. 

Growth of 8% over last year's defence budget 

The budget of Ministry of Defence is estimated to 
grow by 8.1% in 2018-19 over revised estimates of 
2017-18.  In earlier years, defence budget grew at 
19% between 2015-16 and 2016-17, and at 4% 
between 2016-17 and 2017-18.   

The 8% growth is primarily because of an increase 
in pensions and salaries of the defence services, 
and capital outlay.  Pensions are expected to grow 
at 14.6% and salaries at 5.2%.  Capital outlay is 
expected to grow at 8.7%.  Capital outlay includes 
purchase of defence equipment, weaponry, 
aircrafts, naval ships and land for defence services, 
production establishments and research 
organisations.  

Major Head 
Actual 16-17 
Revised 17-18 
Budgeted 18-19 
% change (RE to BE) 
Salaries 
86,945 
97,989 
1,03,096 
5.2% 
Capital Outlay 
86,357 
86,488 
93,982 
8.7% 
Pensions 
87,826 
95,000 
1,08,853 
14.6% 
Stores 
42,633 
38,972 
40,573 
4.1% 
Others 
47,790 
55,555 
57,861 
4.2% 
Total 
3,51,550  
3,74,004  
4,04,365  
8.1% 

Note: Salaries and pensions are of the three services.  Pensions include rewards.  Capital outlay includes capital expenses for research and development and ordnance factories.  Stores includes ammunition, repairs and spares.  Others include administration expenses, construction of roads and bridges in border areas and housing.  RE is revised estimate and BE is budget estimate. Sources: Expenditure Budget, Union Budget 2018-19; PRS. 

Revised Estimates of Expenditure in 2017-18 exceed the Budget Estimates by 4% 
Revised estimates of 2017-18 indicate that the Ministry expects to spend Rs 3,74,004 crore, 4% more than what was budgeted for that year (Rs 3,59,854 crore).  This is primarily due to the higher expenditure on salaries and pensions of Army, Navy and Air Force, and other expenses such as construction of roads and bridges in border areas and housing. However, expenditure on defence stores has seen a decrease of 6%.  Stores include ammunition, petrol, oil, rations, and spares that are key in maintaining defence capital, and ensuring preparedness of the defence forces.  The expenditure on capital outlay is expected to be 100% according to the revised estimates of 2017-18. 

Salaries and pensions comprise 52% of the budget In 2018-19, salaries and pensions of the defence services form the largest portion of the defence budget (52% of the budget or Rs 2,11,949 crore). This is followed by expenditure on capital outlay (23% or Rs 93,982 crore).  The remaining allocation is toward stores, administration of the defence services, construction of roads and bridges, and the Coast Guard organisation. 

Allocations do not meet the projected requirements of the defence services 

Expenditure on the defence services is typically 
lower than the requirements projected by the 
defence services.  For example, for 2015-16, Army, 
Navy, and Air Force projected their requirement of 
funds to be Rs 2,62,336 crore.  Of this demand, a 
sum of Rs 2,27,874 crore was allocated, and of this, 
Rs 2,10,637 crore was spent.3  This implies a 
shortfall of 20%.   

 
Note: Expenditure for 2016-17 is updated till December 2016. Sources: 31st Report, Standing Committee on Defence, March 2017; PRS. 

Consequently, the defence services have to 
reprioritise their activities and purchases according 
to the funds they receive.  The Standing Committee 
has repeatedly noted that this affects expenses on 
stores (e.g. ammunition, repairs, fuel), and 
purchase of new defence machinery and 
equipment.3,4,5  This is because other expenses like 
pays and pensions are committed liabilities of the 
government that cannot be defaulted upon. 

Note that a 2015 CAG audit report has found that 
50% of the ammunition stocks with Army were at 
critically low levels in 2012-13 (i.e., they would 
last for less than 10 days of intense conflict, while 
the requirement was to last for 40 days).6  The 
situation has worsened since 2008-09, when about 
15% of the stocks were at critically low levels.6  
The Standing Committee in 2016 noted poor 
capacity of shipyards to carry out maintenance of 
naval fleets.  For example, in the case of INS 
Sindhukirti, one of the oldest operational 
submarines with Navy, repairs and upgradation 
took 10 years, from 2006 to 2016.7 

## Declining Share Of Capital Expenditure

In 2018-19, capital expenditure is budgeted at Rs 
99,564 crore, and it accounts for 25% of the 
defence budget.  Capital outlay includes 
expenditure on purchasing defence equipment, 
weaponry, aircrafts, naval ships, land, and 
construction of roads and bridges in border areas.  
This is significantly lower as compared to 2010-11 
and 2011-12 when it used to be 33% of the defence 
budget.  Note that in 2017-18, share of capital 

expenditure was the lowest in the last 10 years, at 24% (Rs 91,461 crore) of the defence budget. 

Note: Figures for 2017-18 and 2018-19 are revised estimates and budget estimates, respectively. Sources: Union Budget Documents 2010-11 to 2018-19; PRS. 

The remaining defence expenditure is revenue expenditure which includes expenditure on salaries, pensions, stores required for running the defence services and maintenance of equipment and buildings.  Share of revenue expenditure is typically high because the Indian defence forces are personnel-intensive, with a sanctioned strength of 14.8 lakh personnel.8 The dip in defence capital expenditure and the simultaneous increase in revenue expenditure from 2016-17 onward may be attributed to the increase in salaries and pensions.  This was due to implementation of the One Rank One Pension scheme, and some recommendations of the Seventh Pay Commission (2016-17 onwards).9 The Standing Committee on Defence in 2017 noted that progressively, the budget for capital acquisitions for the services is declining in comparison to revenue allocations, thereby adversely affecting the modernisation process of our armed forces.3   

 
2016-17 
2017-18 
2018-19 
 
Rev 
Cap 
Rev 
Cap 
Rev 
Cap 
Army 
87 
13 
89 
11 
89 
11 
Navy 
51 
49 
54 
46 
54 
46 
Air Force 
49 
51 
51 
49 
51 
49 

Among the three defence services, Army's expenditure has the smallest capital component (11% of its expenditure is on capital under Budget 2018-19).  The Standing Committee on Defence has noted that Army is operating with large scale vintage equipment.5  Further, there is shortfall in number of bulletproof jackets, vehicles, small arms, infantry specialist weapons, surveillance equipment, communication equipment, radars and 

power generators.5  Given there are ammunition 
shortfalls in Army as well (as previously 
mentioned), this may have serious implications for 
border security and defence preparedness.6  In this 
context, the Standing Committee has recommended 
that it is essential to have a revenue capital ratio in 
favour of the capital segment to ensure all the 
services are in a war-ready mode.10  

## Change In Spending Of Capital Budget

From 2010-11 to 2015-16, underspending of capital 
budget has been observed.  However, in 2016-17, 
the Ministry budgeted to spend Rs 90,210 crore and 
actually spent Rs 91,483 (1% greater than the 
budget estimate).  In 2017-18, no underspending or 
overspending of capital budget is expected, at the 
revised estimate stage.  However, there has been 
overspending on revenue items, above the budget 
estimates. 

Sources: Union Budget Documents; PRS. 

The Standing Committee on Defence has noted two 
key reasons behind actuals being lower than budget 
estimates for the capital segment.  One, the 
Ministry of Finance imposes budgetary cuts at the 
revised estimates stage because of the overall 
resource constraints of the central government.  
This affects acquisition of new capital because 
revenue items like salaries and pensions are 
committed liabilities of the government.  Two, 
there is an absence of proper planning in defence 
procurement, and delays in the procurement 
process, preventing optimum utilisation of the 
capital budget.3,5   

In light of these trends, the Standing Committee in 
several of its reports has recommended the need for 
a non-lapsable and roll-on capital allocation.3,10  
This will allow unspent balances from a year to be 
carried over and added to the next year's capital 
budget.  The Committee reiterated this 
recommendation in its 2017 report on 'Creation of 
Non-lapsable Capital Fund Account'.11  Key 

observations and recommendations of the Committee in this respect include: 

 
The Committee noted that defence procurement and acquisition is a complex 
process and takes about five to ten years to 
materialise.  Consequently, funds allocated for it in one financial year may not be completely utilised in that year itself.  The Committee recommended that creation of a Non-lapsable Defence Capital Fund Account will ensure that the money allocated for a particular item is spent entirely on the specified item only, if not necessarily in the same financial year.   
 
It also stated that presently, lack of finance delays the procurement of equipment, and arms and ammunition.  These delays affect the operational preparedness of defence forces. 
 
It also recommended appointment of an expert committee to monitor the progress of defence procurement and ensure compliance with time schedules across procurement contracts.   
 
Further, the Committee emphasised on need for outcome-oriented planning in defence, under which annual targets must be fixed and implemented for specified categories of defence assets (e.g. artillery and air defence guns, bulletproof jackets, submarines, aircraft, mid-air refuellers). 
Note that internationally, defence services endeavour to maintain their capital outlay in the ratio 30:40:30, with 30% for state-of-the-art technology, 40% for current technology and 30% for technology that is becoming obsolete.12  In India, the Ministry of Defence has stated that the reason behind not meeting this standard ratio is insufficient capital budget. 

## Significant Expenditure On Committed Liabilities

Payments for purchase of defence assets are generally made over several years, in a phased manner.  For example, purchase of defence aircraft may require an upfront payment of about 10%, and the remaining amount may be paid in a phased manner over subsequent years.  The upfront payment may be called payment toward a new liability, while payments for contracts from previous years are referred to as committed liabilities.  Typically, about 90% of the capital budget is spent on committed liabilities from previous years. In 2016-17, the government estimated to spend Rs 8,590 crore on purchase of new defence equipment and machinery, i.e., about 12% of the capital budget. 

liabilities (Rs crore) 
Year 
Committed 
New 
Total 
CL as % 
Liabilities 
Liabilities 
of 
(CL) 
Capital 
Budget 
Capital 
Budget 
2014-15 
61,158 
5,402 
66,560 
92% 
2015-16 
71,336 
6,071 
77,407 
92% 
2016-17 
61,410 
8,590 
70,000 
88% 

Note: Capital Budget is a total of committed and new liabilities 
of the defence services and their joint staff.  Data for 2017-18 is 
not available. 
Sources: 22nd Report, Standing Committee on Defence, May 
2016; PRS. 

Note that there is a significant shortage of certain 
kinds of defence equipment and machinery.  Navy 
has 138 vessels and 235 aircrafts, against its 
requirement of 212 vessels and 458 aircrafts.7  
Similarly, against Air Force's requirement of 45 
fighter squadrons, it has 33 active fighter 
squadrons.7  However, in September 2016, the 
government finalised an agreement with France for 
supply of direct flyaway of 36 Rafale aircraft 
between September 2019 and April 2022.13  The 
Defence Minister in an answer to a question in 
Rajya Sabha stated that due to an inter-
governmental agreement between India and France, 
more details on this deal could not be made 
available in the public domain.14   

Further, with regard to Air Force, the Ministry of 
Defence has admitted that the rate at which the 
fighter aircrafts are retiring exceeds the rate at 
which their replacements are being inducted.7  Old 
and obsolete equipment may pose a challenge for 
modernisation of the defence services. 

## Increasing Import Bill

India's defence requirements are met through both 
imports and domestic sources.  However, there is 
greater reliance on imports.  Currently, indigenous 
content in defence acquisition is about 35%.15  
Going forward, the target of the government is to 
achieve about 70% indigenisation in defence 
procurement by 2027.15   It may be noted that India 
was the world's largest importer of arms between 
2010-2014.15  According to SIPRI, its share of 
international arms imports was 15% in this 
period.15  Some of the countries from which India 
imports defence equipment are: Russia, USA, Israel 
and, France.3  The kind of equipment imported 
includes aircrafts, unmanned aerial vehicles, 
helicopters, and ammunition.3 

The Standing Committee on Defence in 2017 noted 
that India's defence import bill has been increasing 
over the years.3  The Committee also observed that 
a substantial percentage of raw materials and parts 
used by Defence Public Sector Undertakings are 
procured from outside India.  For example, the 
import component of equipment manufactured by 

Hindustan Aeronautics Limited ranges from 44% to 60%, and Bharat Electronics Limited ranges from 36% to 44%. Between 2013-14 and 2015-16, India signed 150 
contracts, with a total value of Rs 1,36,664 crore.3  
Of these, 94 contracts worth Rs 82,980 crore were signed with Indian vendors and 56 contracts worth Rs 53,684 crore were signed with foreign vendors (including Russia (12 contracts), USA (13), Israel (10) and France (5)). In March 2016, the government replaced the earlier guidelines regulating defence procurement with the Defence Procurement Procedure, 2016 to address delays and other issues in defence procurement.16 In January 2017, the Defence Acquisition Council cleared an amendment to the Defence Procurement Procedure 2016, related to the 'Make' procedure.  
Projects under this procedure should be indigenously designed and developed, with a minimum of 40% indigenous content.17  The amendment, known as 'Make-II', seeks to simplify the procedure for indigenous manufacture and development of defence equipment.18,19 

## Salaries And Pensions

The two significant components of revenue expenditure in the defence budget are: (i) salaries (25% of the defence budget), and (ii) pensions (27%), of the three services.  In 2018-19, budget for pensions is higher than that for salaries. As Army is a personnel-intensive defence service, a significant part of both the salary and pensions budget is spent on its personnel (current and former).  In 2018-19, of the salaries budget, 78% will be spent on Army, 6% on Navy and 16% on Air Force.  Similarly, of the pensions budget, 88%, 4% and 8% will be spent on Army, Navy and Air Force, respectively. 

| Revised    | Budgeted    | Actual    |
|------------|-------------|-----------|
| 16-17      | 17-18       | 18-19     |
| % change   |             |           |
| (RE to BE) |             |           |
|            |             |           |
|            |             |           |
| Salaries   |             |           |
|            |             |           |
|            |             |           |
| Army       |             |           |
| 70,443     | 77,005      | 8,0945    |
| 5.1%       |             |           |
| Navy       |             |           |
| 4,987      | 5,857       | 6,024     |
| 2.8%       |             |           |
| Air        |             |           |
| Force      |             |           |
| 11,515     | 15,126      | 16,127    |
| 6.6%       |             |           |
| Total      | 86,945      | 97,989    |
|            |             |           |
| Pensions   |             |           |
|            |             |           |
| Army       |             |           |
| 77,658     | 83,722      | 95,949    |
| 14.6%      |             |           |
| Navy       |             |           |
| 3,575      | 4,172       | 4,836     |
| 15.9%      |             |           |
| Air        |             |           |
| Force      |             |           |
| 6,581      | 7,070       | 8,032     |
| 13.6%      |             |           |
| Total      | 87,814      | 94,964    |

Note: RE is revised estimate and BE is budget estimate. Sources:  Expenditure Budget, Union Budget 2018-19; PRS. 

Salaries:  In 2018-19, Rs 1,03,096 crore has been 
allocated for pays and allowances of the 
servicemen and servicewomen.  This is an increase 
of 5.2% over the revised estimates of last year.  The 
government accepted recommendations of the 
Seventh Pay Commission regarding increase in 
salaries and allowances for defence personnel in 
2016.9  However, it is unclear how much has been 
allocated for implementation of these 
recommendations so far. 

As of August 2016, the sanctioned strength of the 
defence services is 14.8 lakh personnel.8  However, 
there are 5% vacancies (73,402 vacancies) within 
the forces, with the Navy having maximum 
vacancies at 14%. 

 
Authorised 
Actual 
Vacancies 
% Vacancies 
Army 
12,52,090 
12,00,255 
51,835 
4% 
Navy 
79,023 
67,865 
11,158 
14% 
Air Force 
1,50,840 
1,40,431 
10,409 
7% 
Total 
14,81,953 
14,08,551 
73,402 
5% 

Sources: Unstarred Question No. 4484, Lok Sabha, August 12, 2016; PRS. 

Pensions:  In 2018-19, Rs 1,08,818 crore has been 
allocated for pensions of ex-servicemen, an 
increase of 15% over the revised estimates of 2017-
18.  The increase in pensions is greater than the 
increase in salaries.  This increase is due to the 
implementation of the One Rank One Pension Rule 
(OROP) being implemented by the government.  

Under OROP, uniform pensions are being paid to 
armed forces personnel retiring at the same rank 
with the same length of service, irrespective of the 
date of retirement.  Further, future increases in rates 
of pension will be automatically passed on to 
existing pensioners through a revision carried out 
every five years.   

OROP is being implemented retrospectively from 
July 1, 2014.  It covers 20,63,529 beneficiary 
pensioners.  Upto September 2017, Rs 10,722 
crores has been released to 20,42,892 defence 
forces pensioners / family pensioners on account of 
OROP in four instalments.20 

Note that ex-servicemen associations have been 
demanding changes to the methodology of 
calculating pension, periodicity of its revision, 
coverage of ex-servicemen who take premature 
retirement under OROP, etc.  The government had 
set up a judicial committee under Justice L. 
Narasimha Reddy to inquire into some of these 
anomalies of implementation.  The committee 
submitted its report on October 26, 2016, but the 
report is not yet in the public domain.21  The 
government constituted an internal Committee in 
July 2017 to examine the recommendations of the 

judicial committee with respect to feasibility and financial aspects.20 The CAG undertook an audit of disbursement of defence pensions.  It submitted its report in July 
2017 and observed certain deficiencies in the Pension Disbursement System.22  These include: (i) incomplete accounting of pension expenditure; and (ii) inefficiencies in the pension authorisation process.  It noted that transmission errors as well as other mistakes in banks, which account for nearly 75% of the pension disbursements, had resulted in numerous cases of underpayments and overpayments. It recommended that Pension Payment Orders should be sent by the Pension Sanctioning Authorities directly to the Pension Disbursement Agencies, in electronic form. 

## Resettlement Of Ex-Serviceman

The Standing Committee on Defence examined the issue of rehabilitation and welfare of ex- 
1 "2nd Report: Demand for Grants (2014-15) General Defence Budget", Standing Committee on Defence, December 22, 2014, http://164.100.47.193/lsscommittee/Defence/16_Defence_2.pdf. 2  Trends in World Military Expenditure 2015, Stockholm International Peace Research Institute, 2017, https://www.sipri.org/sites/default/files/Milex-share-of- GDP.pdf. 3 "31st Report: Demand for Grants (2017-18) Capital Outlay on Defence Services, Procurement Policy and Defence Planning", Standing Committee on Defence, March 2017. 4 "19th Report: Demand for Grants (2016-17) General Defence Budget, Civil Expenditure and Defence Pensions", Standing Committee on Defence, May 3, 2016, http://164.100.47.193/lsscommittee/Defence/16_Defence_19.pdf . 5 "29th Report: Demand for Grants (2017-18) Army, Navy and Air Force", Standing Committee on Defence, March 2017. 6 "Report of the Comptroller and Auditor General of India on Ammunition Management in Army", Performance Audit 19 of 
2015, http://www.saiindia.gov.in/english/home/Our_Products/Audit _Report/Government_Wise/union_audit/recent_reports/union _performance/2015/Defence/Report_19/Report_19.html. 7 "20th Report: Demand for Grants (2016-17) Army Navy and Air Force", Standing Committee on Defence, May 3, 2016, 
"http://164.100.47.193/lsscommittee/Defence/16_Defence_20.p df. 8 Unstarred Question No. 4484, Lok Sabha, August 12, 2016, http://164.100.47.190/loksabhaquestions/annex/9/AU4484.pdf. 9 Seventh Central Pay Commission Report, November 2015, http://7cpc.india.gov.in/pdf/sevencpcreport.pdf. 10 "22nd Report: Demand for Grants (2016-17) Capital Outlay on Defence Services, Procurement Policy and Defence Planning", Standing Committee on Defence, May 3, 2016, http://164.100.47.193/lsscommittee/Defence/16_Defence_22.pdf . 11 "32nd Report: Creation of Non-Lapsable Capital Fund Account, Instead of The Present System", Ministry of Defence, August 2017; 

servicemen.23  It noted that every year, nearly 
60,000 armed forces personnel retire or are released 
from active service, and most of them are in the age 
bracket of 35-45 years.  It highlighted that 
Directorate General Resettlement (DGR) under the 
Ministry of Defence currently does not have any 
powers to ensure that central government 
organisations that have not prescribed a certain 
percentage of vacancies for ex-servicemen do so.  
This was because directions of DGR are presently 
only executive in nature.  It noted that reservations 
made for SCs, STs, OBCs, and Persons with 
Disability (PWD) are statutorily backed and 
consequently, implemented by all central 
government organisations.   

The Committee recommended that the DGR should 
be re-structured and granted statutory powers.  It 
also gave recommendations to increase: (i) 
percentage of reservation in specific grade services 
in central government jobs and (ii) re-settlement of 
ex-servicemen through skill development courses.

. 12 "6th Report: Demand for Grants (2015-16) Civil Expenditure of the Ministry of Defence and Capital Outlay on Defence Services", Standing Committee on Defence, April 27, 2015, http://164.100.47.193/lsscommittee/Defence/16_Defence_6.pdf. 13 Starred Question No. 225, Rajya Sabha, December 6, 2016. 14 Unstarred Question No. 168, Rajya Sabha, February 5, 2018. 

15 "Report of the Experts Committee for Amendments to DPP 
2013 including Formulation of Policy Framework", Ministry of 
Defence, July 2015, 
http://mod.nic.in/writereaddata/Reportddp.pdf.  

16 Defence Procurement Procedure, 2016, March 2016, 
http://mod.nic.in/writereaddata/dppm.pdf.pdf.  

17 Defence Procurement Procedure 2016 (Chapters I to V), 
Ministry of Defence, https://mod.gov.in/sites/default/files/DPP-
2016.pdf.  

18 "Simplified 'Make-II': Major Steps Towards 'Make in India' 
in Defence Production", Press Information Bureau, Ministry of 
Defence, January 17, 2018. 

19 "DAC simplifies procedure to develop defence equipment 
through Indian industry; clears procurements of assault rifles 
and carbines worth Rs 3,547 crore", Press Information Bureau, 
Ministry of Defence, January 16, 2018. 

20 Unstarred Question No. 211, Rajya Sabha, December 18, 
2017. 21 "Protest by ex-servicemen over OROP", Press Information 
Bureau, Ministry of Defence, November 29, 2016. 

22 "Report of the Comptroller and Auditor General of India on 
Disbursement of Defence Pension", Performance Audit 26 of 
2017, July 2017, http://cag.gov.in/content/report-no26-2017-
performance-audit-union-government-disbursement-defence-
pension-reports.  

23 "33nd Report: Resettlement of Ex-servicemen", Ministry of 
Defence, August 2017; 
http://164.100.47.193/lsscommittee/Defence/16_Defence_33.pdf
. 

## Demand For Grants 2018-19 Analysis Food And Public Distribution

The Ministry of Consumer Affairs and Public Distribution has two Departments: (i) Food and Public Distribution, and (ii) Consumer Affairs. The Ministry received the second highest budgetary allocation by the central government among all ministries.   
Department of Consumer Affairs is responsible for spreading awareness among consumers about their rights, protecting their interests and preventing black marketing.24  In 2018-19, the Department has been allocated Rs 1,785 core, which is 52% lower than the revised estimates of 2017-18.25 This note examines the allocations for the Department of Food and Public Distribution.  It also looks at broad issues in the sector, along with key recommendations and observations made by expert committees. 

## Overview Of Finances Budget Estimates 2018-19 (Details In Annexure)

% change 
in 2018-19 
Department 
2016-17 
Actuals 
2017-18 
Revised 
2018-19 
Budgeted 
over 
2017-18 
Consumer Affairs 
7,254 
3,716 
1,785 
-52% 
Food & Public Distribution 
1,15,145 
1,45,892 
1,74,159 
19.4% 
Total 
1,22,399 
1,49,608 
1,75,944 
17.6% 
Sources: Expenditure Budget, Union Budget 2018-19; PRS.   

Department of Food and Public Distribution is responsible for ensuring food security through procurement, storage and distribution of food grains.26  The Food Corporation of India (FCI) is responsible for some of these functions.27  In 2018- 19, the Department has been allocated Rs 1,74,159 crore, which is 99% of the Ministry's allocation.25 Allocation to this Department accounts for 7.1% of the central government's budgeted expenditure. Food subsidy has been the largest component of the Department's expenditure (96% in 2018-19).25 This subsidy is given to FCI under the National Food Security Act, 2013 for the Targeted Public Distribution System (TPDS) or to states for the decentralised procurement of food grains.  The National Food Security Act, 2013 is mandated to cover 75% of the population from rural areas and 50% from urban areas, and currently covers 81 
crore people.28,29   Figure 1 shows the total allocation for the Department over the past 10 years and its corresponding expenditure on food subsidy.   

 Note: Figures for 2017-18 are revised estimates; and for 2018-
19 are budget estimate.   
Sources: Expenditure Budget, Union Budgets 2007-08 to 2018-
19; PRS.  

As seen in Figure 2, over the last 10 years, the 
actual expenditure of the Department has been 
higher than the budget estimates for that year.  
However, this trend reversed in 2016-17 where the 
actual expenditure was 18% lower than the budget 
estimates. 

## Trends In Expenditure On Food Subsidy

Food subsidy is the cost incurred and subsequently 
reimbursed by the Ministry for the procurement, 
storage and distribution of food grains in the 
country.  This subsidy is the difference between the 
cost of procuring food grains and the price at which 
they are given to the beneficiaries (known as 
Central Issue Price). 

As seen in Table 2, expenditure on food subsidy is 
classified under three heads: (i) subsidy to FCI for 

TPDS, (ii) subsidy to states for decentralised procurement, and (iii) sugar subsidy.  

% change in 
2018-19 over 
Subsidy 
2016-17  
Actuals 
2017-18  
Revised 
2018-19 
Budgeted 
2017-18 
Subsidy to FCI on food grains 
78,335  1,01,982  1,38,123  
35.4% 
Subsidy to states on DCP 
27,338  
8,000  
31,000  
-18.4% 
Sugar subsidy 
4,500  
300  
200  
-33.3% 
Total 
1,10,173  1,40,282  1,69,323  
20.7% 

Sources: Demand for Grants 2018-19, Department of Food and Public Distribution; PRS.  
Sugar Industry:  In 2018-19, Rs 200 crore has been allocated for the development of the sugar industry, which is 33% lower than the revised estimates of 2017-18.  The allocated money is used to provide financial assistance to the sugar industry and facilitate payment to sugar cane farmers. Note that as of March 2017, Rs 11,759 crore was outstanding against sugar mills for payment of dues to farmers.30  State-wise details of the arrears can be found in Table 16 of the Annexure. The expenditure on food subsidy has increased four-fold over the past 10 years, from Rs 43,751 crore in 2008-09 to Rs 1,69,323 crore in 2018-19. The Standing Committee on Food and Public Distribution noted that the reasons for the increase in food subsidy include an increase in the procurement cost of food grains, non-revision of the central issue price since 2002, and the implementation of the National Food Security Act, 2013 in all states, among others.31  Table 3 looks at the expenditure on food subsidy over the last 10 years, and its share in the total Union Budget. 

## 2018) (Rs Crore)

Year 
Food 
subsidy 
% increase over 
previous year 
% of total 
budget 
2008-09 
43,751 
40% 
4.9% 
2009-10 
58,443 
34% 
7.8% 
2010-11 
63,844 
9% 
5.3% 
2011-12 
72,822 
14% 
5.6% 
2012-13 
85,000 
17% 
6.0% 
2013-14 
92,000 
8% 
5.9% 
2014-15 
1,17,671 
28% 
7.1% 
2015-16 
1,39,419 
18% 
7.8% 
2016-17 
1,10,173 
-21% 
5.6% 
2017-18 
1,40,282 
27% 
6.3% 
2018-19 
1,69,323 
21% 
6.9% 

Note: Figures for 2017-18 are revised estimates; and for 2018- 19 are budget estimate. Sources:  Expenditure Budget, Union Budgets 2008-09 to 2018- 19); PRS. 

## Issues

In this section, we examine some issues with the 
delivery of food subsidy, current challenges in PDS 
and discuss alternative subsidy systems proposed 
by various committees and experts over the years.   

## Provision Of Food Subsidy

Targeted Public Distribution System (TPDS) 
sought to provide food security to people below the 
poverty line.  Over the years, while the expenditure 
on food subsidy has increased, the ratio of people 
below the poverty line has reduced. (Table 4) 

| Year    | Poverty Ratio (%)    |   No. of Poor (Crore)  |
|---------|----------------------|------------------------|
| 1973-74 | 54.9%                |                   32.1 |
| 1977-78 | 51.3%                |                   32.9 |
| 1983-84 | 44.5%                |                   32.3 |
| 1987-88 | 38.9%                |                   30.7 |
| 1993-94 | 36.0%                |                   32   |
| 2004-05 | 27.5%                |                   30.2 |
| 2011-12 | 21.9%                |                   26.9 |

Note: Figures from 1973 to 2004 have been computed using the 
Lakdawala Methodology, and figures for 2011-12 using the 
Tendulkar Methodology.  
Sources: Planning Commission; PRS. 

A similar trend can also be seen in the proportion 
of undernourished persons in India, which reduced 
from 24% in 1990 to 15% in 2014 (Table 5). 

| Number of            | Proportion of    |
|----------------------|------------------|
| Year                 | undernourished   |
| persons (crores)     |                  |
| undernourished in    |                  |
| total population (%) |                  |
| 1990-92              | 21               |
| 2000-02              | 19               |
| 2005-07              | 23               |
| 2010-12              | 19               |
| 2014-15*             | 20               |

*Provisional data. Sources: Food and Agriculture Organisation, 2015: Table 5.14, Chapter 5, Economic Survey 2015-16; PRS. 

Nutritional balance:  The National Food Security 
Act, 2013 guarantees five kg of food grains per 
person per month to entitled beneficiaries.  Further, 
Antyodaya Anna Yojana households which 
constitute the poorest of the poor, are entitled to 35 
kg per household per month.   

As can be seen in Figure 3 and Figure 4, there has 
been a change in the pattern of nutritional intake 
among people both in rural and urban areas.  

Although, cereals or food grains contain only 10% protein, their share as a percentage of the total protein intake has been over 50% in both rural and urban areas.32   However, other foods such as meat and pulses contain more than 20% protein but contribute to only 15% of the total protein intake of the country.32 The share of cereals in food consumption has reduced by 7% in rural areas and 5% in urban areas, whereas that of milk, eggs, fish and meat has increased.32  This indicates a reduced preference for wheat and rice, and a rise in preference towards other protein rich food items.  The National Food Security Act, 2013 states that the central government and state governments should undertake steps to diversify commodities distributed under TPDS.28 More details related to the intake of calorie and nutrients by the rural and urban population can be found in Table 9 and Table 10 of the Annexure. Imbalance in farm production:  Minimum Support Price (MSP) is the price at which the government purchases a farmer's produce. Typically, the MSP is higher than the market price and seeks to incentivise farmers to grow crops on which the support is offered.  Food grains for PDS are usually procured at the MSP.  As a result, procurement under MSP has been restricted to wheat and paddy (rice) in a few states, to maintain a buffer stock for release under PDS.33,34   

It has been argued that this skews the production of 
crops in favour of wheat and paddy, and does not 
offer an incentive for farmers to produce other 
items such as pulses.42  The figure below shows the 
share of crop produce procured in 2016-17. 

Sources: Committee on Doubling Farmers' Income 2017; 
Ministry of Agriculture and Farmers Welfare; PRS. 

## Revision Of Central Issue Price (Cip)

Under the National Food Security Act, 2013, food 
subsidy is given to beneficiaries at the CIP, which 
was last revised in 2002.  CIP for wheat and rice 
can be found in Table 6.   

| Commodity    |   AAY  |   BPL  |   APL  |
|--------------|--------|--------|--------|
| Rice         |      3 |   5.65 |   7.95 |
| Wheat        |      2 |   4.15 |   6.1  |

Note: AAY-Antyodaya Anna Yojana, BPL-Below Poverty Line, APL-Above Poverty Line. Sources: TPDS, Department of Food and Public Distribution. 

In comparison to the CIP, the economic cost 
(including procurement, stocking, distribution) for 
wheat is Rs 24/kg and for rice is Rs 33/kg as of 
February 2018.35  Food subsidy is calculated as the 
difference between the economic cost of procuring 
food grains, and their CIP.   

While the economic cost for rice has increased 
from Rs 1,098/quintal (approximately Rs 11/Kg) in 
2001-02 to Rs 3,310 /quintal in 2018-19, and of 
wheat, from Rs 853/quintal to Rs 2,446/quintal 
over the same period, the CIP has not been 
revised.35  This has led to an increasing gap 
between the economic cost and CIP, leading to an 
increase in expenditure on food subsidy.42  Trends 
in economic cost, CIP and subsidies for wheat and 
rice can be found in Figure 6 and Figure 7 below. 

In 2017-18, the Ministry had stated that increasing the CIP could be one of the measures to bridge the gap between the funds it requires, and the funds it is actually allocated.30  Details related to the procurement of food grains, off-take and stock can be found in of the Annexure. 

## Delivery Of Food Subsidy

Leakages in PDS:  Leakages refer to food grains not reaching intended beneficiaries.  According to 2011 data, leakages in PDS were estimated to be 46.7% (see Table 11).27,36 Leakages may be of three types: (i) pilferage or damage during transportation of food grains, (ii) diversion to non-beneficiaries at fair price shops through issue of ghost cards, and (iii) exclusion of people entitled to food grains but who are not on the beneficiary list.37,38  Studies have shown that targeting mechanisms such as TPDS are prone to large exclusion and inclusion errors.39   
Exclusion errors occur when entitled beneficiaries do not get food grains.   It refers to the percentage of poor households that are entitled to but do not have PDS cards.  As seen in Figure 8, exclusion errors declined from 55% in 2004-05 to 41% in 2011-12.   
Inclusion errors occur when those that are ineligible get undue benefits.  Inclusion errors increased from 29% in 2004-05 to 37% in 2011-12. 

Declining exclusion errors and increasing inclusion 
errors are due to two reasons.  First, increase in the 
coverage of TPDS has reduced the proportion of 
poor who do not have access to PDS cards.  
Second, despite a decline in poverty rate, the non-
poor are still identified as poor by the government 
thus allowing them to continue using their PDS 
cards.40  

 
Sources:  Evaluation study on the role of PDS in shaping households and nutritional security in India, Niti Aayog, December 2016; PRS. 

Note that under NFSA, states are responsible for 
identification of beneficiaries.  In 2016, the 
Comptroller and Auditor General (CAG) found that 
this process had not been completed by the states, 
and 49% of the beneficiaries were yet to be 
identified.41   

Alternative subsidy systems:  Over the years, 
several solutions that have been suggested include: 
(i) DBT of food subsidy, and (ii) end to end 
computerisation of the entire system.27,61   

The NFSA states that the centre and states should 
introduce schemes for cash transfers to 
beneficiaries.28  Various experts and bodies have 
also suggested replacing TPDS with a Direct 
Benefit Transfer (DBT) system.42,43  Advantages 
and disadvantages of these methods of delivering 
benefits have been discussed below.   

 
TPDS:  TPDS assures beneficiaries that they 
would receive food grains, and insulates them against inflation and price volatility.  Further, food grains are delivered through fair price shops in villages, which are easy to access.44,45 

 However, high leakages have been witnessed 
in the system, both during transportation and 
distribution.  These include pilferage and 
errors of inclusion and exclusion from the 
beneficiary list.  In addition, it has also been 
argued that the distribution of wheat and rice 
may cause an imbalance in the nutritional 
intake.28  Beneficiaries have also reported 
receiving poor quality food grains as part of 
the system.   

 
Cash Transfers:  Cash transfers seek to 
increase the choices available with a beneficiary, and provide financial assistance. It has been argued that the costs of DBT may 
be lesser than TPDS, owing to lesser costs 
incurred on transport and storage.  These transfers may also be undertaken electronically.44,45  

On the other hand, it has been argued that cash 
received as part of DBT may be spent on non-
food items.  Further, such a system may expose 
beneficiaries to inflation.  In this regard, one 
may also consider the low penetration and 
access to banking in rural areas.46 

In 2015, the Department released two notifications: The Cash Transfer of Food Subsidy Rules and The Food Security (Assistance to State Governments) Rules.48,49   As per these notifications, the central government offers state governments two choices for reforming their respective PDS machinery: (i) replacing the existing PDS with DBT, or (ii) Fair Price Shop automation, which involves installation of Point of Sale devices, for authentication of beneficiaries and electronic capturing of transactions. 

## Evaluation Report On Dbt In Food By Niti Aayog, July 2017 47

Since September 2015, DBT for food subsidy is 
being implemented in Puducherry, Chandigarh, and 
Dadra and Nagar Haveli.50  In July 2017, Niti 
Aayog conducted an evaluation study of DBT in the 
three union territories.  Key findings of the study 
include: 
 On average, only two thirds of beneficiaries 

confirmed receiving the DBT benefits in their accounts. (67% in Chandigarh, 67% in 
Puducherry and 65% in Dadra and Nagar Haveli) 
 On average, it costs beneficiaries more (in time 
and money) to access and redeem DBT amount than in collecting food rations from Fair Price Shops. 
 Adding the time costs and expenses incurred in 
travel with the additional out of pocket spending on rations, 24% of beneficiaries cited DBT entitlement insufficiency as the biggest issue they faced. 
So far, more than 2.9 lakh (54%) Fair Price Shops have been automated across the country.50  Details regarding the status of computerisation of PDS can be found in **Table**  of the Annexure.   
The High-Level Committee on Restructuring of FCI in 2015 had suggested that switching to DBT for food subsidy would reduce the food subsidy bill of the government by more than Rs 30,000 crore.51  

While making this recommendation, the Committee 
illustrated this by taking the case of subsidy given 
on rice (Table 7).  It assumed that as part of DBT, 
the government would transfer Rs 22/Kg for rice to 
a beneficiary. 

| 1. CIP                                     | Rs 3/Kg    |
|--------------------------------------------|------------|
| 2. MSP                                     | Rs 20/Kg   |
| 3. Subsidy (3=2-1)                         | Rs 17/Kg   |
| Rs 27/Kg                                   |            |
| 4.Cost to government                       |            |
| (Subsidy + Costs on procurement, storage   |            |
| and distribution)                          |            |
| 5. Cash subsidy to beneficiaries           | Rs 22/Kg   |
| 6. Government saving (6=5-4)               | Rs 5/Kg    |
| 7. Increase in beneficiary benefit (7=5-3) | Rs 5/Kg    |

Sources: High Level Committee Report on Reorienting FCI, January 2015; PRS. 

Aadhaar: The Committee had also recommended 
the introduction of biometrics and Aadhaar to plug 
leakages in PDS.  Such transfers could be linked to 
Jan Dhan account, and be indexed to inflation.51  As 
of December 2017, 119 crore Aadhaar cards had 
been issued, covering 98% of the population.52 

In February 2017, the Ministry made it mandatory 
for beneficiaries under NFSA to use Aadhaar as 
proof of identification for receiving food grains.53  
This is expected to facilitate the removal of bogus 
ration cards, check leakages and ensure better 
delivery of food grains.27,54,55   

Note that as of July 2017, while 100% ration cards 
had been digitised, the seeding of these cards with 
Aadhaar was at 79%.56   For details related to 
deleted ration cards due to detection of bogus, fake, 
and duplicate cards, see Table 13 of the Annexure. 

## Current Challenges In Pds

Storage:  The Department allocates funds for the 
construction of godowns to increase storage 
capacity.  This includes allocations for the 
Warehousing Development and Regulatory 
Authority (WADA).  In 2018-19, Rs 60 crore has 
been allocated for storage and godowns, and Rs 
eight crore has been allocated to WADA. 

As of December 2017, the total storage capacity in 
the country is 725 lakh tonnes, of which 359 lakh 
tonnes is with the FCI and 366 lakh tonnes is with 
the state agencies.57  The total stock of food grains 
in the country as of July 2017 was 555 lakh tonnes.   

The CAG in its performance audit found that the 
available storage capacity in states was inadequate 
for the allocated quantity of food grains.58  For 
example, as of October 2015, of the 233 godowns 
sanctioned for construction in Maharashtra, only 93 
had been completed.  In Assam, although the 
storage capacity was enough for the state's 
allocation, the conditions of the godown were 
found to be too damp for storage.  Some of the 

storage in Jharkhand was also found to be unfit, either because of its remote location or the damaged condition of the godowns. The CAG also noted that in four of the last five years, the stock of food grains in the central pool had been higher than the storage capacity available with the FCI (see Figure 9).46  

 
As seen in **Figure** , it was only in 2015 that the stock of food grains was lower than the storage capacity.  According to the CAG, this was owing to an increase in procurement under Decentralised Procurement (DCP), and less food grains in the central pool.46  Under DCP, the state governments undertake procurement, storage and distribution of food grains on behalf of the central government. The states are reimbursed by the centre for the expenditure incurred by them.59 
24 Functions and the duties of the Department of Consumer Affairs, Department of Consumer Affairs, http://consumeraffairs.nic.in/forms/contentpage.aspx?lid=204.   
25 Expenditure Budget, Union Budget 2018-19, http://unionbudget.nic.in/ub2018-19/eb/allsbe.pdf. 26 Department of Food and Public Distribution, http://dfpd.nic.in/. 27 Report of the High Level Committee on Reorienting the Role and Restructuring of Food Corporation of India, January 2015, http://www.fci.gov.in/app2/webroot/upload/News/Report%20of %20the%20High%20Level%20Committee%20on%20Reorienti ng%20the%20Role%20and%20Restructuring%20of%20FCI_E nglish_1.pdf. 28 National Food Security Act, 2013, http://indiacode.nic.in/actsin-pdf/202013.pdf. 29 Unstarred Question No. 612, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on February 6, 2018, http://164.100.47.190/loksabhaquestions/annex/14/AU612.pdf. 30 15th Report of the Standing Committee on Food, Consumer Affairs and Public Distribution: Demands for Grants 2017-18, Department of Food and Public Distribution, http://164.100.47.193/lsscommittee/Food,%20Consumer%20Aff airs%20&%20Public%20Distribution/16_Food_Consumer_Affa irs_And_Public_Distribution_15.pdf. 31 18th Report of the Standing Committee on Food, Consumer Affairs and Public Distribution: Demands for Grants 2017-18, Department of Food and Public Distribution, http://164.100.47.193/lsscommittee/Food,%20Consumer%20Aff

The Standing Committee on Food, Consumer 
Affairs and Public Distribution has recommended 
increasing the procurement undertaken by states, 
and reducing the expenditure on centralised 
procurement by the FCI.30  They noted that this 
would drastically reduce the transportation cost 
borne by the government as states would distribute 
the food grains to the targeted population within 
their respective states.  As on December 2017, only 
17 states have adopted decentralised procurement.60 

Note that during 2018-19, while the food subsidy 
given to FCI has increased by 35% over the revised 
estimates of 2017-18, the allocation to states for 
DCP reduced by 18%.25 

Fair Price Shops:  It has been observed by various 
experts and the Ministry that the margins on which 
the Fair Price Shops operate are low.61  Further, in 
the absence of economic viability, there may be 
cases where the dealer resorts to unfair practices.  
In order to make these shops viable, states have 
taken various steps: 

 
Chhattisgarh provided seed capital of Rs 75,000 to each fair price shop free of any interest for 20 years.  It also increased the commission on food grains from Rs 8/quintal to Rs 30/quintal. 
 
States such as Assam and Delhi have permitted the sale of non-PDS items at these fair price shops.  Such items include oil, potatoes, onion, tea, and mobile recharge coupons.

airs%20&%20Public%20Distribution/16_Food_Consumer_Affa
irs_And_Public_Distribution_18.pdf. 
32 "Nutritional Intake in India 2011-12, NSS 68th Round, 
National Sample Survey Office, Ministry of Statistics and 
Programme Implementation, October 2014, 
http://mospi.nic.in/sites/default/files/publication_reports/nss_rep
ort_560_19dec14.pdf.   

33 Volume II, Economic Survey of India 2015-16, 
http://indiabudget.nic.in/es2015-16/echapvol2-05.pdf.   
34 Task Force on Agricultural Development, NITI Aayog, 
http://niti.gov.in/mgov_file/Raising%20Agricultural%20Product
ivity%20and%20Making%20Farming%20Remunerative%20for
%20Farmers.pdf. 
35 Economic Cost, Food Corporation of India (last accessed on 
February 9, 2018), http://fci.gov.in/finances.php?view=23.   
36 Third Report of the Standing Committee on Food, Consumer 
Affairs and Public Distribution: Demands for Grants 2015-16, 
Department of Food and Public Distribution, 
http://164.100.47.193/lsscommittee/Food,%20Consumer%20Aff
airs%20&%20Public%20Distribution/16_Food_Consumer_Affa
irs_And_Public_Distribution_3.pdf.   

37 The Case for Direct Cash Transfers to the Poor, Economic and 
Political Weekly, April 2008, 
http://www.epw.in/system/files/pdf/2008_43/15/The_Case_for_
Direct_Cash_Transfers_to_the_Poor.pdf.   
38 Performance Evaluation of Targeted Public Distribution 
System, Planning Commission of India, March 2005, 
http://planningcommission.nic.in/reports/peoreport/peo/peo_tpd
s.pdf.   

                                                                                                                                                                                     
http://www.epw.in/system/files/pdf/2011_46/44-45/Revival_of_the_Public_Distribution_System_Evidence_and_Explanations.pdf. http://164.100.47.190/loksabhaquestions/annex/14/AU607.pdf. 


## Annexure Detailed Expenditure Table

Table 8 provides an overview of expenditure on the major schemes of the Ministry, provided in the Demands for Grants (2018-19). In addition, major shifts in the budgetary allocation are shown in the last two columns.   

% increase in 
Budget  
Budget  
Major Heads 
Actual  
Increase 
2018-19 (BE) over 
2016-2017 
2017-2018 
Revised  
2017-2018 
2018-2019 
2017-18 (RE) 
Secretariat 
50  
55  
65  
64  
-2% 
1  
National Sugar Institute, Kanpur 
19  
21  
20  
24  
15% 
3  
Other Establishment Expenditure of Food, Storage and Warehousing 
17  
19  
18  
19  
5% 
1  
Food Subsidy 
1,10,173  
1,45,339  
1,40,282  
1,69,323  
21% 
29,041  
Of which: 

          -    
Food Subsidy to FCI under NFSA 
78,335  
1,07,139  
1,01,982  
1,38,123  
35% 
36,141  
Food Subsidy for DCP of Food grains under NFSA 
27,338  
38,000  
38,000  
31,000  
-18% 
7,000  
Sugar Subsidy payable under PDS 
4,500  
200  
300  
200  
-33% 
100  
2,500  
4,500  
4,500  
4,000  
-11% 
500  
Assistance to State Agencies for intrastate movement of food grains and FPS dealers margin under NFSA Development of Sugar Industry 
1,672  
496  
918  
611  
-33% 
307  
Strengthening of PDS Operations 
57  
 -  
30  
41  
39% 
12  
Storage and Godowns 
12  
60  
53  
60  
14% 
7  
Warehousing Development and Regulatory Authority 
15  
15  
7  
8  
21% 
1  
Other 
589  
               -    
0  
10  
 
 
Total 
1,15,145  
1,50,505  
1,45,892  
1,74,159  
19% 
28,267  

Sources: Expenditure Budget, Vol. 2, Union Budget 2018-19; PRS.   

| Vegetables &       | Miscellaneous    |
|--------------------|------------------|
|                    |                  |
| Cereals            |                  |
| Pulses, nuts       |                  |
| & oilseeds         | fruits           |
| Meats, eggs & fish |                  |
| Milk & milk        |                  |
| products           | food             |
| Rural              |                  |
|                    |                  |
| 1993-94            |                  |
| 71.0               | 4.9              |
| 1999-00            |                  |
| 67.6               | 5.5              |
| 2004-05            |                  |
| 67.5               | 5.0              |
| 2009-10            |                  |
| 64.2               | 4.5              |
| 2011-12            |                  |
| 61.1               | 5.2              |
| Urban              |                  |
|                    |                  |
| 1993-94            |                  |
| 58.5               | 6.1              |
| 1999-00            |                  |
| 55.1               | 6.9              |
| 2004-05            |                  |
| 56.1               | 6.7              |
| 2009-10            |                  |
| 55.0               | 5.9              |
| 2011-12            |                  |
| 51.6               | 6.4              |

Sources: Table T18, "Nutritional Intake in India, 2011-12", NSSO; PRS.   

 
Year 
Cereals 
Pulses 
Milk & milk products 
Egg, fish & meat 
Other food 
Rural 
1993-94 
69.4 
9.8 
8.8 
3.7 
8.4 
1999-00 
67.4 
10.9 
9.2 
4.0 
8.4 
2004-05 
66.4 
9.5 
9.3 
4.0 
10.8 
2009-10 
64.9 
9.1 
10.0 
4.0 
12.0 
2011-12 
62.5 
10.6 
10.6 
4.7 
11.7 
Urban 
1993-94 
59.4 
11.5 
11.7 
5.3 
12.1 
1999-00 
57.0 
13.1 
12.4 
6.0 
11.5 
2004-05 
56.2 
11.0 
12.3 
5.5 
15.0 
2009-10 
56.4 
11.3 
13.8 
5.6 
13.0 
2011-12 
53.7 
12.4 
13.6 
6.4 
13.9 

Sources: Table T21, "Nutritional Intake in India, 2011-12", NSSO; PRS.   

State/UT 
Total consumption from 
PDS 
Offtake 
(2011-12) 
Leakage 
% leakage 
Andhra Pradesh 
36.1 
40.7 
4.6 
11.3% 
Arunachal Pradesh 
0.8 
1.0 
0.2 
20.0% 
Assam 
9.5 
24.4 
14.9 
61.1% 
Bihar 
11.3 
36.2 
24.9 
68.8% 
Chhattisgarh 
16.7 
16.7 
0.0 
0.0% 
Goa 
0.4 
0.8 
0.4 
50.0% 
Gujarat 
4.4 
15.7 
11.3 
72.0% 
Haryana 
2.2 
7.3 
5.1 
69.9% 
Himachal Pradesh 
4.9 
6.3 
1.4 
22.2% 
Jammu and Kashmir 
8.8 
9.1 
0.3 
3.3% 
Jharkhand 
3.1 
12.4 
9.3 
75.0% 
Karnataka 
16.2 
30.1 
13.9 
46.2% 
Kerala 
11.4 
20.1 
8.7 
43.3% 
Madhya Pradesh 
15.5 
30.7 
15.2 
49.5% 
Maharashtra 
19.3 
42.7 
23.4 
54.8% 
Manipur 
0.0 
2.0 
2.0 
100.0% 
Meghalaya 
0.8 
2.5 
1.7 
68.0% 
Mizoram 
0.9 
1.1 
0.2 
18.2% 
Nagaland 
0.1 
2.0 
1.9 
95.0% 
Odisha 
15.4 
24.4 
9.0 
36.9% 
Punjab 
3.4 
8.7 
5.3 
60.9% 
Rajasthan 
10.1 
29.8 
19.7 
66.1% 
Sikkim 
N/A 
N/A 
- 
- 
Tamil Nadu 
39.5 
45 
5.5 
12.2% 
Tripura 
2.7 
3.3 
0.6 
18.2% 
Uttar Pradesh 
43.2 
82.9 
39.7 
47.9% 
Uttarakhand 
4.6 
6.6 
2.0 
30.3% 
West Bengal 
13.4 
43.9 
30.5 
69.5% 
Total 
295.5 
554.5 
259 
46.7% 

Note: Data is from National Sample Survey, 2011-12. Sources: Table 1, Working Paper 294, "Leakages from Public Distribution System", ICRIER, January 2015; PRS.  

|             | Year    |       |
|-------------|---------|-------|
| Procurement | Offtake |       |
| % Offtake   |         |       |
| Stocks      |         |       |
| Rice        | Wheat   | Total |
| 2007-08     | 28.7    | 11.1  |
| 2008-09     | 34.1    | 22.7  |
| 2009-10     | 32.0    | 25.4  |
| 2010-11     | 34.2    | 22.5  |
| 2011-12     | 35.0    | 28.3  |
| 2012-13     | 34.0    | 38.2  |
| 2013-14     | 31.9    | 25.1  |
| 2014-15     | 31.6    | 28.0  |
| 2015-16     | 34.1    | 28.1  |
| 2016-17     | 36.5    | 23.6  |
| 2017-18     | 6.2     | 30.1  |

Notes: Figures for stock as of August 2017.  Offtake and stock numbers up to May 2017. Sources: Reserve Bank of India; PRS. 

Online 
Online Allocation 
State/UT 
Digitisation of 
Ration Cards 
Aadhaar Seeding 
in Ration Cards 
of Food grains 
Computerization 
of Supply-chain 
Transpare ncy Portal 
Grievance 
Redressal 
Andhra Pradesh 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Arunachal Pradesh 
100% 
45% - 
- 
Yes 
- 
Assam 
100% 
0% Implemented 
- 
Yes 
Yes 
Bihar 
100% 
69% Implemented 
Implemented 
Yes 
Yes 
Chandigarh 
100% 
100% NA 
NA 
Yes 
Yes 
Chhattisgarh 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Goa 
100% 
91% Implemented 
Implemented 
Yes 
Yes 
Gujarat 
100% 
95% Implemented 
Implemented 
Yes 
Yes 
Haryana 
100% 
86% Implemented 
Implemented 
Yes 
Yes 
Himachal Pradesh 
100% 
91% Implemented 
Implemented 
Yes 
Yes 
Jammu and Kashmir 
100% 
45% Up to TSOs 
- 
Yes 
- 
Jharkhand 
100% 
97% Implemented 
Implemented 
Yes 
Yes 
Karnataka 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Kerala 
100% 
98% Implemented 
- 
Yes 
Yes 
Madhya Pradesh 
100% 
91% Implemented 
Implemented 
Yes 
Yes 
Maharashtra 
100% 
87% Implemented 
Implemented 
Yes 
Yes 
Manipur 
100% 
22% Partial 
- 
Yes 
Yes 
Meghalaya 
100% 
0% - 
- 
Yes 
Yes 
Mizoram 
100% 
45% Implemented 
- 
Yes 
Yes 
Nagaland 
100% 
7% - 
- 
Yes 
Yes 
Odisha 
100% 
88% Implemented 
Implemented 
Yes 
Yes 
Punjab 
100% 
97% Implemented 
- 
Yes 
Yes 
Rajasthan 
100% 
95% Implemented 
- 
Yes 
Yes 
Sikkim 
100% 
82% Implemented 
- 
Yes 
Yes 
Tamil Nadu 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Telangana 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Tripura 
100% 
98% Implemented 
Implemented 
Yes 
Yes 
Uttar Pradesh 
100% 
77% Implemented 
- 
Yes 
Yes 
Uttarakhand 
100% 
90% Implemented 
- 
Yes 
Yes 
West Bengal 
100% 
62% Implemented 
Implemented 
Yes 
Yes 
Andaman & Nicobar Islands 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Dadra and Nagar Haveli 
100% 
96% Implemented 
Implemented 
Yes 
Yes 
Daman and Diu 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Delhi 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Lakshadweep 
100% 
98% - 
NA 
Yes 
Yes 
Puducherry 
100% 
100% NA 
NA 
Yes 
Yes 
Total 
100% 
79% 
30* 
20 
36 
34 
Sources: Unstarred Q. No. 1464, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on July 24, 2017; PRS  
| Crop    | Paddy Common    | % increase over last year    | Wheat    | % increase over last year    |
|---------|-----------------|------------------------------|----------|------------------------------|
| 2006-07 | 580             | 1.8%                         | 750      | 15.4%                        |
| 2007-08 | 645             | 11.2%                        | 1,000    | 33.3%                        |
| 2008-09 | 850             | 31.8%                        | 1,080    | 8.0%                         |
| 2009-10 | 1,000           | 17.6%                        | 1,100    | 1.9%                         |
| 2010-11 | 1,000           | 0.0%                         | 1,120    | 1.8%                         |
| 2011-12 | 1,080           | 8.0%                         | 1,285    | 14.7%                        |
| 2012-13 | 1,250           | 15.7%                        | 1,350    | 5.1%                         |
| 2013-14 | 1,310           | 4.8%                         | 1,400    | 3.7%                         |
| 2014-15 | 1,360           | 3.8%                         | 1,450    | 3.6%                         |
| 2015-16 | 1,410           | 3.7%                         | 1,525    | 5.2%                         |
| 2016-17 | 1,470           | 4.3%                         | 1,625    | 6.6%                         |
| 2017-18 | 1,550           | 5.4%                         | 1,735    | 6.3%                         |

Note: Data includes bonus announced for the particular crop. Source: Directorate of Economics and Statistics, Department of Agriculture and Co-operation; CCEA; PRS.   

| States/UTs                  |
|-----------------------------|
| Andhra Pradesh              |
| 11,55,661                   |
| Arunachal Pradesh           |
| 19,561                      |
| Assam                       |
| 1,29,243                    |
| Bihar                       |
| 41,369                      |
| Chandigarh                  |
| -                           |
| Chhattisgarh                |
| 12,38,000                   |
| Goa                         |
| 1,57,461                    |
| Gujarat                     |
| 1,60,685                    |
| Haryana                     |
| 1,88,425                    |
| Himachal Pradesh            |
| 3,260                       |
| Jammu and Kashmir           |
| 55,344                      |
| Jharkhand                   |
| 4,53,958                    |
| Karnataka                   |
| 27,49,532                   |
| Kerala                      |
| -                           |
| Madhya Pradesh              |
| 4,18,509                    |
| Maharashtra                 |
| 21,62,391                   |
| Manipur                     |
| 336                         |
| Meghalaya                   |
| -                           |
| Mizoram                     |
| 1,503                       |
| Nagaland                    |
| 3,247                       |
| Odisha                      |
| 6,86,211                    |
| Punjab                      |
| 1,01,249                    |
| Rajasthan                   |
| 14,66,629                   |
| Sikkim                      |
| 12,840                      |
| Tamil Nadu                  |
| 4,22,746                    |
| Telangana                   |
| 20,97,564                   |
| Tripura                     |
| 1,76,986                    |
| Uttar Pradesh               |
| 68,80,999                   |
| Uttarakhand                 |
| -                           |
| West Bengal                 |
| 66,13,961                   |
| Andaman and Nicobar Islands |
| 37                          |
| Dadra and Nagar Haveli      |
| 549                         |
| Daman and Diu               |
| 631                         |
| Delhi                       |
| 64,090                      |
| Lakshadweep                 |
| 1,390                       |
| Puducherry                  |
| 95,393                      |
| Total                       |
| 2,75,59,760                 |

Sources: Unstarred Q. No. 632, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on Feb 6, 2018; PRS. 

State 
Cane Price Arrears 2016-17 
Cane Price Arrears 2015-16 
Cane Price Arrears For 2014-15 
Cane Price Arrears For 2013-14 & Earlier 
Total Cane Price Arrears 
Andhra Pradesh 
 215  
 22  
 16  
 -    
 253  
Bihar 
 239  
 2  
 3  
 39  
 283  
Chhattisgarh 
 24  
 1  
 -    
 -    
 25  
Goa 
 2  
 -    
 -    
 -    
 2  
Gujarat 
 455  
 14  
 -    
 14  
 482  
Haryana 
 308  
 -    
 -    
 -    
 308  
Karnataka 
 911  
 28  
 -    
 86  
 1,024  
Madhya Pradesh 
 208  
 4  
 -    
 13  
 225  
Maharashtra 
 363  
 70  
 140  
 69  
 642  
Odisha 
 36  
 -    
 -    
 3  
 39  
Puducherry 
 -    
 8  
 -    
 4  
 12  
Punjab 
 322  
 -    
 -    
 -    
 322  
Tamil Nadu 
 617  
 677  
 277  
 273  
 1,845  
Telangana 
 115  
 2  
 -    
 -    
 117  
Uttar Pradesh 
 5,305  
 368  
 45  
 108  
 5,826  
Uttarakhand 
 284  
 45  
 -    
 25  
 354  
West Bengal 
 -    
 -    
 1  
 -    
 1  
Total 
 9,403  
 1,241  
 482  
 633  
 11,759  

Sources:  Report of the Standing Committee on Food and Public Distribution on Demand for Grants 2017-18; PRS.

Demand for Grants 2018-19 Analysis Rural Development The Ministry of Rural Development is responsible for development and welfare activities in rural areas.  The Ministry has two departments: (i) rural development, and (ii) land resources. The Ministry of Rural Development has the third highest ministry-wise allocation in the Union Budget 2018-19, of Rs 1,14,915 crore.  This is an increase of Rs 4,041 crore (3.6%) over the revised estimates of 2017-18. 

The **Department of Rural Development** under the Ministry is responsible for implementation of all major schemes in rural areas.  These schemes are targeted at poverty reduction, employment generation, rural infrastructure, habitation development, and provision of basic services.  In 2018-19, the Department has an allocation of Rs 1,12,404 crore, accounting for 97.8% of the Ministry's allocation. 

The **Department of Land Resources** is primarily responsible for undertaking land reforms.  It supports states in the implementation of the National Land Records Modernization Programme, and aims to increase productivity of land through the process of integrated watershed management. In 2018-19, the Department has an allocation of Rs 2,511 crore, which is 37.1% more than the revised estimates of 2017-18. This note presents the detailed budgetary allocations to the Ministry of Rural Development, and analyses various issues related to the schemes implemented by the Ministry. 

## Allocation To The Ministry In 2018-19

In 2018-19, the Department of Rural Development has witnessed a 3% increase in funds from revised estimates of 2017-18.  In 2017-18, the Department was allocated Rs 1,05,448 crore, which was revised upwards by Rs 3,594 crore in the revised estimates for that year. On the other hand, the Department of Land Resources saw a 37% increase in allocation in 2018-19, from the revised estimates of 2017-18.  In 2017-18, the budgeted expenditure of Rs 2,310 crore was decreased by Rs 478 crore at the revised estimates stage. Table 1 shows the allocations to the Ministry of Rural Development over the past three years. 

| Revised     | Budgeted    |
|-------------|-------------|
| Department  |             |
| Actuals     |             |
| 16-17       | 17-18       |
| % change    |             |
| (RE to BE)  |             |
| Rural       |             |
| Development |             |
| 95,069      | 1,09,042    |
| Land        |             |
| Resources   |             |
| 1,658       | 1,832       |
| Total       | 96,727      |

Note: BE is budget estimate and RE is revised estimate. 
Sources: Demands for Grants 2018-19, Department of Rural 
Development and Department of Land Resources, Ministry of 
Rural Development; PRS. 

## Department Of Rural Development

Over the past 10 years, the allocation to the 
Department of Rural Development has seen an 
annual average increase of 7%.  Except in 2011-12 
and 2012-13, when the allocation was reduced in 
comparison to the previous year, funds allotted to 
the Department have seen an increase over the 
years.  In recent years, the highest increase in 
allocation was seen in 2016-17, when it was 23% in 
comparison to the previous year.   

 
Note: Values for 2017-18 and 2018-19 are revised estimates and budget estimates respectively. Sources: Union Budgets 2009-10 to 2018-19; PRS. 

% change 
Revised 
Budgeted 
(RE to 
Major Head 
Actual 
16-17 
17-18 
18-19 
BE) 
MGNREGS 
48,215  
55,000  
55,000  
0.0% 
PMAY-G  
16,071  
23,000  
21,000  
-8.7% 
PMGSY 
17,923  
16,900  
19,000  
12.4% 
NSAP 
8,854  
8,745  
9,975  
14.1% 
NRLM 
3,158  
4,350  
5,750  
32.2% 
Rurban Mission 
599  
600  
1,200  
100.0% 
Others 
249  
447  
479  
7.0% 
Total 
95,069  
1,09,042  
1,12,404  
3.1%  

Note: BE is budget estimate and RE is revised estimate. Sources: Demands for Grants 2018-19, Department of Rural 
Development, Ministry of Rural Development; PRS. 
 
The funds for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which account for nearly half of the department's budget, have remained unchanged. 
 
The housing scheme, Pradhan Mantri Awaas Yojana- Gramin (PMAY-G) has seen a decrease in allocation by 8.7%. 
 
National Rural Livelihoods Mission (NRLM), which aims to provide sustainable livelihood opportunities, has seen an increase of 32.2%. 
 
Funding for the welfare scheme, the National Social Assistance Program (NSAP) has seen an increase of 14%, money allocated for the rural roads scheme, Pradhan Mantri Gram Sadak Yojana (PMGSY) has seen an increase of 12.4%. 
 
The allocation for Rurban Mission, which aims to develop village clusters into economically and socially sustainable spaces, has been 
doubled, over the revised estimates of last year, though on a small base. 
Figure 2 represents the composition of expenditure of the Department of Rural Development.  In 2018-
19, 49% of the Department's expenditure is 

estimated to be on the Mahatma Gandhi National 
Rural Employment Guarantee Scheme.  This is 
followed by the rural component of Pradhan Mantri 
Awaas Yojana (19%), and Pradhan Mantri Gram 
Sadak Yojana (17%).  Over the years, it has been 
observed that this split in the department's 
expenditure has remained the same. 

## Policy Proposals In Union Budget 2018-19

The following provisions were made for the Ministry in the 2018-19 Budget speech:  

 
Under Phase III of Pradhan Mantri Gram Sadak Yojana, habitations will be connected to agricultural and rural markets, higher secondary schools, and hospitals. 
 
Under Pradhan Mantri Awaas Yojana - Gramin, 51 lakhs houses will be constructed in 2017-18 and 2018-19. 
 
Loans to Self Help Groups (SHGs) will increase to Rs 75,000 crore by March 2019.  Allocation to National Rural Livelihood Mission (NRLM) has been increased substantially to Rs 5,750 crore. 
 
Women SHGs will be encouraged to take up organic agriculture in clusters under NRLM. 

Table 3 below details out the policy proposals for 
rural development as highlighted in the budget 
speech of 2017-18 and their implementation 
status.62 

## Table 10: Policy Proposals And Their Implementation Status

Policy proposal 
Implementation status 

 
During 2017-18, five lakh farm ponds will be taken up.  This will contribute to drought proofing of gram panchayats. 

 
As against a target of five lakh farm ponds for 2017-18, 3.91 lakh farm ponds have been completed as on January 15, 2018. 

 
Geo-tag and putting all MGNREGA assets and in public domain to established greater transparency. 

 
As on January 15, 2018, 3.15 crore assets out of 3.29 crore completed works have been geo tagged.   
 
Targets under PMGSY will be completed by 2019.  Habitations with more than 100 persons in left wing extremism affected blocks will also be connected. 
 
82% habitations have been connected so far. Habitations in left wing extremism affected blocks have also been undertaken in 9 states with a target of constructing 5,382 km. 
 
51 lakh houses will be completed by March 2018 to complete the target of construction of one crore houses by March 2019. 
 
As against the target for 2017-18, as on December 26, 2017, construction of 15.57 lakh rural houses has been completed. 
 
Mason training will be provided to five lakh persons by 2022, with an immediate target of training at least 20,000 persons by 2017-18. 
 
As on December 18, 2017, 5,107 candidates have been trained, and 1,057 candidates are undergoing training. 

Sources: Implementation of Budget Announcements 2017-18; PRS. 

## Financial Allocations To Outcomes Mahatma Gandhi National Rural Employment Guarantee Scheme

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was launched in 2005 through the Mahatma Gandhi National Rural Employment Guarantee Act, 2005.63  The primary objective of the Act is to provide guaranteed 100 days of wage employment per year to each rural household.  The Act specifies a list of works that can be undertaken to generate employment.  These are related to water conservation, drought proofing, land development, flood control and protection works, among others.  The scheme at present covers all districts of the country with the exception of those that have a 100% urban population.64 90% of MGNREGS funds come from the central government.  The fund releases are made to the states after they submit their labour budgets, estimating the anticipated demand for works.65  A minimum of 50% of MGNREGS works are to be executed by gram panchayats. 

Budgeted versus actual expenditure:  Figure 3 
shows the expenditure on the scheme from 2009-10 to 2018-19.  For most of these years, expenditure on the scheme has been more than 50% of the department's budget.  During 2017-18, budgetary allocation for the scheme was increased by 15%, from budget estimates of Rs 48,000 crore to Rs 55,000 crore at the revised estimates stage.  Its share of the department budget in 2018-19 is Rs 55,000 crore.  The allocation to the scheme has steadily increased, but has remained constant in the past few years. 

Sources: Union Budgets 2009-10 to 2018-19; PRS. 

It may be pertinent to note that from 2009-10 to 2012-13, the scheme has witnessed underspending.  In 2013-14, the actual expenditure was almost similar to the budget estimates.  However, in the last three years, the actuals in 2015-16 and 2016-17 and revised estimates in 2017-18 have exceeded the budget estimates. 

Table 4 shows the trends in allocation and actual estimates of expenditure on NREGS over the past nine years. 

Table 11:  Budgeted versus actual expenditure on MGNREGS (Rs crore) 
Year 
Budgeted 
Actuals 
% of 
budgeted 
2009-10 
39,100 
33,539 
86% 
2010-11 
40,100 
35,840 
89% 
2011-12 
40,000 
29,212 
73% 
2012-13 
33,000 
30,273 
92% 
2013-14 
33,000 
32,992 
100% 
2014-15 
34,000 
32,977 
97% 
2015-16 
34,699 
37,341 
108% 
2016-17 
38,500 
48,215 
125% 
2017-18 
48,000 
55,000 
115% 

Note: The 'utilised' figure for 2017-18 is the revised estimate. Sources: Union Budgets 2009-10 to 2017-18; PRS. 

Demand for work:  MGNREGS is a demand 
driven scheme.  The proportion of households that 
demanded employment saw an increase of 15% 
from 2014-15 to 2015-16, and an increase of 1% 
from 2015-16 to 2016-17.  However, the proportion 
of households that received employment has seen a 
decrease, from 97% in 2012-13 to 90% in 2016-17.  
Over the years, work demanded under the scheme 
has remained stable.  However, demand in 
employment has seen a decrease of 4% this year.  
Till February 2018, 87% of these households have 
been provided with employment. 

Sources: NREGS MIS Reports from 2012-13 to 2016-17; PRS. 

The Comptroller and Auditor General (CAG) of 
India in 2013 carried out a performance audit of the 
scheme.66  It highlighted a significant decline in per 
rural household employment generation, from 54 
days in 2009-10 to 43 days in 2011-12.  Although 
in 2012-13, average employment reached 50 days, 
it reached a low of 40 days in 2014-15.  In 2017-
18, till February, the average days of employment 
provided per household was 39.  Note that this is 
significantly lower than the 100 days of 
employment that the Act guarantees. 

per household under NREGS  
| Year                   |   Average days of employment  |
|------------------------|-------------------------------|
| provided per household |                               |
| 2012-13                |                           50  |
| 2013-14                |                           49  |
| 2014-15                |                           40  |
| 2015-16                |                           48  |
| 2016-17                |                           46  |
| 2017-18                |                           39  |

Sources: NREGS MIS Reports from 2012-13 to 2016-17; PRS.  
Delayed payments:  MGNREGS stipulates that wage payments must be made within 15 days of the date of closure of the muster roll.64  Delays in payments are calculated from the 16th day onwards. Table 5 below shows the percentage of delayed payments out of the total payments for the past five years.  It also indicates the number of days that payments were delayed by.  As can be seen in the table, the proportion of delayed payments had increased from 39% in 2012-13 to 73% in 2014-15, but has reduced since then.  In 2017-18, delayed payments have come down substantially from the previous year.  Till February 2018, 14% of the payments were delayed, amounting to Rs 5,33,281 crore.   

Composition of delayed 
% 
payments (%) 
Year 
delayed 
payments  
> 90 
days 
60-90 
days 
30-60 
days 
15-30 
days 
2012-13 
39 
28.5 
14.8 
26.9 
29.8 
2013-14 
50 
18.4 
13.9 
30.1 
37.6 
2014-15 
73 
18.6 
13.7 
30.8 
36.8 
2015-16 
66 
6.2 
9.3 
31.2 
53.3 
2016-17 
56 
25.0 
14.9 
28.1 
32.0 
2017-18 
14 
6.4 
6.2 
24.7 
62.7 

Note: Data for 2017-18 is updated till February 13, 2018. Sources: NREGS MIS Reports from 2012-13 to 2017-18; PRS.  
Non-payment of unemployment allowance (if employment is not provided within 15 days of application) is high across states.  Currently under the NREGA, unemployment allowance is paid from state government funds.63  Non-sharing of unemployment allowance by the central government puts an additional burden on the states.66  It has been suggested that the Ministry of Rural Development should consider partial reimbursement of unemployment allowance.66 
Other issues:  The Standing Committee on Rural Development in 2013 examined the implementation of the scheme.67  It found several issues with the implementation of the scheme, including (i) fabrication of job cards, (ii) delay in payment of wages, (iii) non-payment of unemployment allowances, (iv) a large number of 

incomplete works, (v) poor quality of assets 
created, (vi) several instances of malpractices and 
corruption, and (vii) insufficient involvement of 
Panchayati Raj Institutions. 
 

## Pradhan Mantri Awaas Yojana- Gramin

This housing scheme, previously known as Indira 
Awaas Yojana, got the second highest allocation in 
the Department's budget this year.  The funds 
allocated to the scheme comprise 19% of the 
Department's finances. 

IAY was launched in May 1985 as a sub-scheme of 
Jawahar Rozgar Yojana.68   Since January 1, 1996, 
it is being implemented as an independent scheme.  
Under IAY, financial assistance of Rs 70,000 in 
plain areas and Rs 75,000 in hilly areas is provided 
to rural BPL households for construction of a 
dwelling unit.  Under PMAY-G, this has been 
enhanced to Rs 1,20,000 in plain areas and Rs 
1,30,000 in hilly areas.  The cost of unit assistance 
will be shared between the centre and state in the 
ratio of 60:40 in plain areas and 90:10 in hilly 
states.  Additionally, the size of a dwelling unit is 
being increased from 20 square meters (sq. M) to 
up to 25 sq. M. 

In 2018-19, the allocation to the scheme saw a 
decline of 8.7%, (from revised estimates of 2017-
18 to budget estimates of 2018-19) this year.   

Note: Values for 2017-18 and 2018-19 are revised estimates and budgeted estimates respectively. Sources: Union Budgets 2009-10 to 2018-19; PRS. 

Table 7 shows the trends in allocation and actual 
estimates of expenditure on rural housing scheme 
(previously IAY and now PMAY-G) over the past 
nine years.  As can be observed, there has been 
substantial underutilisation of funds in 2012-13 and 
2014-15.  Under-expenditure affects the pace of 
construction of houses under the scheme. 

| Year     | Budgeted    | Actuals    |
|----------|-------------|------------|
| % of     |             |            |
| budgeted |             |            |
| 2009-10  | 7,918       | 8,799      |
| 2010-11  | 8,996       | 10,337     |
| 2011-12  | 8,996       | 9,872      |
| 2012-13  | 9,966       | 7,868      |
| 2013-14  | 13,666      | 12,981     |
| 2014-15  | 16,000      | 11,106     |
| 2015-16  | 10,025      | 10,116     |
| 2016-17  | 15,000      | 16,071     |
| 2017-18  | 23,000      | 23,000     |

Note: The 'utilised' figure for 2017-18 is the revised estimate. Sources: Union Budgets 2009-10 to 2017-18; PRS. 

Targets in construction of houses:  The budget speech announced that under the scheme, 51 lakh houses will be constructed in each year in 2017-18 and 2018-19.  In last year's speech, the government had proposed to complete construction of one crore houses by 2019.69  Table 8 shows the number of houses constructed under the scheme in the past five years. 

| Year        | Houses    |
|-------------|-----------|
| constructed |           |
| 2013-14     | 74,855    |
| 2014-15     | 70,975    |
| 2015-16     | 1,21,959  |
| 2016-17     | 16,11,498 |
| 2017-18     | 5,77,543  |

Note: Data for 2017-18 is updated till February 23, 2018. Sources: Yearwise breakup of houses completed report 2017-18, Pradhan Mantri Awaas Yojana; PRS. 

Note that against the target of constructing 51 lakh houses in 2017-18, so far less than six lakh houses have been constructed in over 10 months.   
Performance of the scheme:  In August 2016, the Standing Committee on Rural Development examined the scheme.  It observed that between 2012 and 2016, the number of houses constructed fell short of the target by 440 lakh units.70  The number of houses that were not constructed were 8.8 lakh in 2013, 8.6 lakh in 2014 and 2.7 lakh in 2015. 

Other issues:  The Committee also noted issues such as insufficiency of funds, significant gaps between allocation and releases, and underutilisation of released amount in the last few years. It recommended that the Ministry needed to strengthen its data collection mechanism under the scheme to correctly evaluate the differences between targeted and constructed houses.  It stated that his would also help in accurately estimating the actual rural housing shortage in the country.   
Upgradation of kutcha houses:  Large number of kutcha houses are present in the states of Bihar 

(65.65lakh), Uttar Pradesh (48.3 lakh), Madhya 
Pradesh (47.45 lakh), etc.  Special initiatives should 
be undertaken by the Ministry, state governments 
and other stakeholders to initiate the process of 
upgradation of houses.  This will also help achieve 
the objective of housing for all by 2022 in a time-
bound manner. 
 

## Pradhan Mantri Gram Sadak Yojana

Pradhan Mantri Gram Sadak Yojana was launched 
in December 2000 and seeks to provide all-weather 
road connectivity to all eligible unconnected 
habitations, existing in the core network in rural 
areas of the country.  The scheme got the third 
highest allocation in the Department's budget this 
year.  Expenditure on PMGSY accounts for 17% of 
the Department's expenditure in 2018-19. 

As Figure 6 indicates, over the past ten years, the 
highest allocation was in 2010-11 at Rs 27,386 and 
has decreased to Rs 19,000 crore in 2018-19.   

Note: Values for 2017-18 and 2018-19 are revised estimates and budgeted estimates respectively. 

Sources: Union Budgets 2009-10 to 2018-19; PRS. 

| Year     | Budgeted    | Actuals    |
|----------|-------------|------------|
| % of     |             |            |
| budgeted |             |            |
| 2012-13  | 24,000      | 8,387      |
| 2013-14  | 21,700      | 13,095     |
| 2014-15  | 14,391      | 14,188     |
| 2015-16  | 14,291      | 18,290     |
| 2016-17  | 19,000      | 17,923     |
| 2017-18  | 19,000      | 16,900     |

Note: The 'utilised' figure for 2017-18 is the revised estimate. Sources: Standing Committee on Rural Development reports from 2012-13 to 2017-18; PRS. 

Note that in most years, there has been significant underutilisation of funds, which in turn effects the construction of rural roads under the scheme. 

Inconsistency in budgetary allocation:  Standing Committees over the years have highlighted substantial reduction of funds at the revised estimates stage in this scheme.71,72  Due to this short-fall in financial allocation, targets (habitations connected and road length constructed) have not been met over the years.  From 2005-06 to 2017- 18, 89% of the target habitation have been connected.  States are yet to complete the roads to provide connectivity to the remaining habitations. The reasons given by the department include: (i) inadequate institutional capacity and limited contracting capacity in some states, (ii) non availability of sufficient qualified technical personnel including engineers, contractors, and (iii) non-availability of construction materials, limited working season and adverse climate conditions in some states. 

Mismatch between targets and achievements:  
The CAG conducted an audit of the PMGSY for the period from April 2010 to March 2015.73  It submitted its report in August 2016.  It noted that the achievements under the scheme from 2010-11 to 2014-15 was more than the target set for those years.  It reasoned that the targets were not realistically fixed.  CAG also observed that despite a lower allocation at the revised estimates stage, achievements continued to be higher as compared to the targets. Table 10 and 11 give details of length of roads constructed and habitations connected in the last ten years, under the scheme. 

## Pmgsy (Km)

| Year       | Target length    |
|------------|------------------|
| Completed  |                  |
| length     |                  |
| Completed  |                  |
| length (%) |                  |
| 2005-06    | 28,774           |
| 2006-07    | 45,395           |
| 2007-08    | 55,020           |
| 2008-09    | 64,440           |
| 2009-10    | 55,000           |
| 2010-11    | 34,090           |
| 2011-12    | 30,566           |
| 2012-13    | 30,000           |
| 2013-14    | 26,950           |
| 2014-15    | 21,775           |
| 2015-16    | 33,649           |
| 2016-17    | 48,812           |
| 2017-18    | 51,000           |
| Total      | 5,25,471         |

Note: Data for 2017-18 is updated till February 13, 2018. Sources: Pradhan Mantri Gram Sadak Yojana Online Management, Monitoring and Accounting System (OMMAS), Ministry of Rural Development; PRS. 

Table 18: Habitations connected under PMGSY 
Year 
Target 
habitations 
Connected 
habitations 
Connected 
habitations 
(%) 
2005-06 
12,962 
6,633 
51% 
2006-07 
13,857 
7,767 
56% 
2007-08 
14,005 
8,990 
64% 
2008-09 
18,100 
10,718 
59% 
2009-10 
13,000 
8,786 
68% 
2010-11 
4,000 
8,360 
209% 
2011-12 
4,000 
7,666 
192% 
2012-13 
4,000 
9,413 
235% 
2013-14 
3,500 
9,515 
272% 
2014-15 
4,688 
11,121 
237% 
2015-16 
10,177 
9,953 
98% 
2016-17 
15,000 
11,742 
78% 
2017-18 
15,000 
7,082 
47% 
Total  
1,32,289 
1,17,746 
89% 

Note: Data for 2017-18 is updated till February 13, 2018. 
Sources: Pradhan Mantri Gram Sadak Yojana Online 
Management, Monitoring and Accounting System (OMMAS), 
Ministry of Rural Development; PRS. 

Financial management:  The CAG audit observed 
that from 2010-2012, states did not fully utilise the 
central assistance, which led to a substantial 
reduction of funds at the revised estimates stage 
from 2012-2015.  The Department also reasoned 
that the reduction at the revised estimates stage was 
due to the availability of unspent balances from 
previous years with the states and the slow pace of 
implementation.  In March 2017, the Standing 
Committee on Rural Development in its report 
stated that with enhanced funding for the scheme 
from 2015-16, the Ministry should ensure that: (i) 
finances are utilised optimally and properly, (ii) 
leakages are checked, (iii) utilisation certificates are 
received on time, and (iv) e-payments are the 
preferred mode for payments to contractors.74 

Maintenance of roads:  For ensuring sustainability 
of roads built under PMGSY, each contractor has 
to provide for: (i) defect liability for five years, and 
(ii) paid routine maintenance after completion of 
work.  The Committee noted that 21% of the 
completed work under PMGSY was not properly 
maintained.74  Further, only 15 states had 
formulated Rural Roads Maintenance Policy.  Out 
of a target of training 7,271 persons, so far only 
1,732 engineers and 1,020 contractors have been 
trained. 

The Committee recommended that the Ministry 
should ensure that the remaining states expedite the 
process of formulating Rural Roads Maintenance 
Policy, in order for the roads built under the 
scheme to remain functional.  A time-bound 
strategy should also be evolved to impart training 
to remaining engineers and contractors for proper 
maintenance of roads. 

Upgradation of the scheme- PMGSY-II:  In 
2015, the government brought forward the completion date of PMGSY from 2022 to 2019. The government plans to achieve the target at an earlier date by providing enhanced financial allocation and modifying the funding pattern of the scheme.  The sub-group of Chief Ministers on Rationalization of Centrally Sponsored Schemes has recommended that fund sharing pattern of PMGSY should be in the ratio of 60:40 between the centre and states.75  The existing centre-state sharing is in the ration 75:25.  This recommendation has been accepted by the Ministry.  The allocation to the scheme was enhanced in 2016-17, but has been kept unchanged in 2017-18 and 2018-19.  It remains to be seen how in the absence of an implementation plan, the target will be achieved within three years instead of the initially planned six years. In March 2017, the Standing Committee on Rural Development in its report stated that till 2016, only eight states had transitioned into the second phase of the program.74  Out of a target length of 50,000 km between 2012 and 2017, 13,525 km of road length has been sanctioned and 7,701 km has been competed in these eight states up to 2016.  It recommended that necessary steps should be taken to achieve targets set under the scheme. 

 

## National Social Assistance Program

NSAP is a welfare program which comprises of a number of sub-schemes that primarily aim to provide public assistance to citizens in case of unemployment, old age, sickness and any form of disability.  The scheme has been in existence since 1995.  NSAP got the fourth highest allocation under the Department's budget.  The funds allocated to the scheme comprise 9% of the Department's finances. Table 12 below shows the budget estimates, revised estimates, and actual expenditure by states under the scheme from 2012-13 to 2015-16.  

| Year        | B.E.    | R.E.    | Actuals    | % change    |
|-------------|---------|---------|------------|-------------|
| (Actual/BE) |         |         |            |             |
| 2012-13     | 8,447   | 7,885   | 6,912      | -18.2%      |
| 2013-14     | 9,615   | 9,615   | 8,534      | -11.2%      |
| 2014-15     | 10,635  | 7,241   | 7,087      | -33.4%      |
| 2015-16     | 9,082   | 9,082   | 8,616      | -5.1%       |
| 2016-17     | 9,500   | 9,500   | 8,854      | -6.8%       |

Sources: Standing Committee on Rural Development 2016-17 and 2017-18; Union Budget 2018-19; PRS. 

The Standing Committee examining the scheme noted that there was a huge shortfall of funds between the revised estimates and actuals stage.72  It said that this impacts the implementation of the scheme and also affects the beneficiaries.  The table below shows the number of beneficiaries under the various sub-schemes of NSAP. 

various sub-schemes of NSAP (lakhs) 
  
Number of beneficiaries reported 
2014-15 
2015-16  
2016-17 2017-18 
IGNOAPS 
230 
230 
210 
213 
IGNWPS 
60 
60 
60 
57 
IGNDPS 
10 
8 
8 
7 
NFBS 
3 
4 
2 
3 
Annapurna 
9 
4 
2 
- 
Total  
312 
306 
282 
280 

Note: Data for 2017-18 is updated till January 2018.   
Sources: Unstarred question No. 2874 and 1033, answered on 
December 04, 2018 and February 8, 2018, Ministry of Rural 
Development; Standing Committee Report on Rural 
Development 2017-18; PRS.  

As can be observed, the number of beneficiaries 
has fallen by 10% in the last four years, from 2014-
15 to 2017-18. 
 

## National Rural Livelihoods Mission

National Rural Livelihoods Mission (NRLM) aims 
at creating efficient and effective platforms for the 
rural poor and in the process, increase their 
household income.  The mission aims to achieve 
this through sustainable livelihood enhancements 
and improved access to financial services.  The 
scheme has been in existence since July 2011.  The 
scheme got the fifth highest allocation under the 
Department's budget.  The funds allocated to the 
scheme comprise 4% of the Department's finances. 

NRLM has been renamed as Deen Dayal 
Antyodaya Yojana.  Under the programme, one 
woman from each poor household is brought into 
Self Help Groups (SHGs).  The programme 
envisages universal coverage of all 8-9 crore rural 
poor households to be organised into 70-75 lakh 
SHGs and their federations at the village and 
cluster level by 2024-25. 

Table 14 below shows the actual expenditure by 
states under the scheme from 2012-13 to 2015-16. 

| Year        | B.E.    | R.E.    | Actuals    | % change    |
|-------------|---------|---------|------------|-------------|
| (Actual/BE) |         |         |            |             |
| 2012-13     | 3,915   | 2,600   | 2,195      | -43.9%      |
| 2013-14     | 4,000   | 2,600   | 2022       | -49.5%      |
| 2014-15     | 4,000   | 2,186   | 1,413      | -64.7%      |
| 2015-16     | 2,705   | 2,597   | 2,514      | -7.1%       |
| 2016-17     | 3,000   | 3,000   | 3,157      | 5.2%        |
| 2017-18     | 4,500   | 4,350   | -          | -           |

Note: From 2015-16, allocation to start-up village entrepreneurship program has also been included. Sources: Union Budgets 2012-13 to 2017-18; PRS. 

(ii) 
digitization of maps, and integration of textual and spatial data; 
(iii) 
survey/ re-survey, and updating of all survey and settlement records including creation of 
original cadastral records (record of the area, 
ownership and value of land) wherever necessary; 
The Standing Committee examining the scheme noted that substantial reduction at the revised estimates stage affects the implementation of the scheme.72  It has been observed that one of the major issues under the scheme is lack of awareness resulting in ineffective social mobilisation and institution building.  Another issue that has been pointed out is the lack of experienced and trained professionals at state, district and block levels to mentor and train the Self Help Groups. 

(iv) 
computerisation of registration and its integration with the land records maintenance system; and 
(v) 
development of core Geospatial Information System (GIS) and capacity building.   
It has been recommended that baseline surveys for beneficiary identification should be fast tracked for better implementation of the scheme.72 
 

## Department Of Land Resources

The Department of Land Resources implements two key schemes: (i) Integrated Watershed Development Component of Pradhan Mantri Krishi Sinchai Yojana, and (ii) Digital India Land Records Modernisation Programme. This year, the department saw a 37% increase in allocation over the revised estimates of 2017-18. Out of the Rs 2,511 crore allocated to the department, Rs 2,251 crore will be spent on Pradhan Mantri Krishi Sinchai Yojana, and Rs 250 crore will be spent on Land Records Modernisation Programme. 

Department of Land Resources (Rs crore) 
% 
Revised 
Budgeted 
Major head 
Actual 
16-17 
17-18 
18-19 
change 
(RE to 
BE) 
PMKSY 
1,511 
1,722 
2,251 
30.7% 
DILRMP 
139 
100 
250 
150% 
Secretariat 
9 
10 
10 
0% 
Total 
1,658 
1,832 
2,511 
37.1% 

Note: PMKSY is Pradhan Mantri Krishi Sinchai Yojana. DILRMP is Digital India Land Records Modernisation Programme.  BE is budget estimate and RE is revised estimate. Sources: Demands for Grants 2018-19, Department of Land Resources, Ministry of Rural Development; PRS. 

Digital India Land Records Modernisation Programme (DILRMP):  DILRMP is a part of the Digital India initiative.76  The scheme was changed into a Central Sector Scheme in April 2016.77  With this change, the scheme will now be implemented by the central government with 100% of the grants coming from the centre.  Between 2009 and 2016, about Rs 946 crore was sanctioned by the central government under DILRMP, of which Rs 412 crore was released.78  The major components of DILRMP are: 

(i) 
computerisation of all existing land records including mutations (or transfers); 

DILRMP intends to eventually move from the 
existing system of presumptive titles to conclusive 
and state guaranteed titles.  The conclusive title 
system is based on four basic principles: 

(i) A single window system for land records 
which will provide for the maintenance and updating of textual records, maps, survey and settlement operations and registration of immovable property.   
(ii) The cadastral records reflect all the significant 
and factual details of the property titles.   
(iii) The record of title is a true depiction of the 
ownership status, mutation is automatic following registration, and the reference to past records is not necessary.   
(iv) Title insurance, which means that the 
government guarantees the title for its correctness, and will compensate the title holder against losses arising due to defects in the title. 

Financial progress:  In 2018-19, the programme 
has been allocated Rs 250 crore, which is an 
increase of 150% over the revised estimates of 
2017-18.  Table 16 shows the trends in allocation 
and actual estimates of expenditure on DILRMP 
over the past nine years.  Note that there is 
significant underspending across all the years.   

on Land Records Modernisation Programme (Rs crore) 
| Year                                                             |   Budgeted  |   Actuals  |
|------------------------------------------------------------------|-------------|------------|
| % of                                                             |             |            |
| budgeted                                                         |             |            |
| 2009-10                                                          |        360  |       199  |
| 2010-11                                                          |        200  |       156  |
| 2011-12                                                          |        150  |       106  |
| 2012-13                                                          |        150  |        95  |
| 2013-14                                                          |        378  |       213  |
| 2014-15                                                          |        250  |       179  |
| 2015-16                                                          |         90  |        40  |
| 2016-17                                                          |        150  |       139  |
| 2017-18                                                          |        150  |       100  |
| Note: The 'utilised' figure for 2017-18 is the revised estimate. |             |            |
| Sources: Union Budgets 2009-10 to 2017-18; PRS.                  |             |            |

From 2008 till September 2017, 64% of the funds released under DILRMP have been utilised. 

Progress under DILRMP:  DILRMP is currently being implemented in all states, but with differential progress.79  We look at the progress of the different components of the programme below. 

Computerisation:  As of September 2017, six states/ union territories (UTs) have completed computerisation of land records (100% complete), 10 states/ UTs have completed between 95%- 99%, and five states/ UTs have not started.  19 states/ UTs have started issuing digitally signed RoRs.  Of these, in five states, more than 95% of the villages have been issuing digitally signed RoRs.  18 states/ UTs have started linking cadastral maps to the RoRs.  Out of these, two states (Odisha and Tripura) have almost completed this process. Further, 86% of land records have been computerised.  This implies that the current land record on paper has been digitised and uploaded on system, from which citizens can access this information.  However, only 47% of the mutation records (recording the transfer of ownership) have been computerised.  This means that the remaining 53% of the records have not been updated with the current data on ownership.  If the intent of digitising records is to have easy access to correct data, real time updating of property records becomes essential.  However, real time updation of RoR and maps has been done for only 15% of the land records.  The RoR is the primary record that shows how rights on land are derived for the land owner, and records the property's transactions from time to time.  Typically, it provides (i) names of all persons who have acquired some rights with regard to the land, (ii) the nature and limits of their rights, and (iii) the rent or revenue to be paid by them. 

About 46% of the cadastral maps have been digitised so far.  Further, only 39% of the spatial data has been verified.  This could mean that the digitised records are still incomplete, as 61% of the records would not have updated spatial data. Further, this could imply that spatial records of land are at variance from the information in RoRs. Consequently, one can see that only 26% of cadastral maps have been linked to RoRs.  As has been noted by various expert committees, most spatial records date back several years, implying that they may not reflect changes in property records.80  Under the DILRMP, re-survey and survey work has been carried out in only 9% of the villages. 

Survey and re-surveys:  In December 2016, 
certain changes were made to DILRMP.81  As per 
the changes, survey or re-survey operations will be 
conducted only when the RoR, or field book or 
map are not available or are destroyed/ damaged/ 
outdated.  Further, if there is a difference between 
the area recorded in both the documents, the area 
recorded in the RoR will prevail.  Note that 20 
states/ UTs have not started the process of survey/ 
re-survey.  

Note that most of the 6.4 lakh villages in the 
country were surveyed and their cadastral maps 
prepared during the late 19th and early 20th century.  
In rural areas, more than 140 million land owners 
have more than 430 million records.80  There are 
about 92 million ownership holdings, each with 
four to six parcels of holdings.  The survey/ re-
survey has to be done for each plot of land.  
Further, the government and each land owner must 
arrive at an agreement certifying that the owner is 
satisfied with the survey.80  This further 
necessitates the need to undertake surveys on a 
periodic basis to update information in cadastral 
maps.  The Expert Committee on Land Titling 
(2014) had recommended that for a guaranteed 
titling system, it is essential that the spatial and 
textual records are integrated and unified, so that 
there is no gap between the two.82 

Capacity building:  The entire process of data 
collection and storage with regard to land records 
happens at the village, city, or block level.  The 
Committee on State Agrarian Relations (2009) had 
observed that for updating land records and 
strengthening land management, there is a need to 
build capacity among officials at all levels.  It 
recommended that, with the introduction of new 
technology such as GIS, GPS and use of satellite 
imagery to update land records, manpower 
responsible for upgradation, registration, and 
maintenance of land records should be adequately 
trained and skilled.   

Estimates suggest that this training exercise has to 
be carried out for one-two lakh patwaris, over 
50,000 survey staff, and in approximately 5,000 
tehsils, and 4,000 registration offices.80  The 
Standing Committee on Rural Development in 
2016 also recommended the need to enhance the 
capacity at the level of patwari and tehsildar for 
effective implementation of DILRMP.83

Development (2014-15), http://164.100.47.193/lsscommittee/Rural%20Development/16_Rural_Development_6.pdf. 

Demand for Grants 2018-19 Analysis Home Affairs The Ministry of Home Affairs is responsible for matters concerning internal security, centre-state relations, central armed police forces, border management, and disaster management.  In addition, the Ministry also makes certain grants to the union territories.  This note analyses the expenditure trends and budget proposals for the Ministry of Home Affairs for 2018-19, and presents some issues in the sector. 

## Overview Of Finances84

The Ministry of Home Affairs (MHA) has been allocated Rs 1,07,573 crore in Union Budget 2018- 19.  This is an increase of 5.1% over the revised estimates in 2017-18, which was Rs 1,02,391 crore. Further, this is 10.7% higher than the budget allocation of last year, which was Rs 97,187 crore. The budget for the Ministry of Home Affairs constitutes 4.4% of the total expenditure budget of the union government in 2018-19. Figure 1 below shows the allocation to the Ministry of Home Affairs between 2009 to 2018.  The average 
 
Of the total budget estimates for 2018-19, (i) 81.7% of the expenditure is on police; (ii) 13.1% is on grants made to union territories (UTs), and (iii) 5.2% is on miscellaneous items such as disaster management, rehabilitation of refugees and migrants, census and Cabinet.  Table 1 shows the allocations to the main heads under the Ministry of Home Affairs in the Union Budget over the last three years. 

% 
2017-18 
2018-19 
 
2016-17 
Actuals 
RE 
BE 
Change 
(BE 18-
19/RE 
17-18) 
Police 
73,054 
82,293 
87,887 
6.8% 
UTs* 
13,258 
14,248 
14,123 
-0.9% 
5,306 
5,850 
5,563 
-4.9% 
Others (includes disaster management)** Total 
91,618 
1,02,391 
1,07,573 
5.1% 

Source: Union Budget, 2017-18; PRS. 
Note: * Includes grants made to administer the seven UTs. 
**Includes expenditure on disaster management, social security, 
rehabilitation of refugees and migrants, census, civil defence, 
secretariat, and cabinet.  
RE: Revised Estimates; BE: Budget Estimates 

Police:  For 2018-19, Rs 87,887 crore has been 
allocated toward police.  Budget estimates for police 
has increased by 6.8% from revised estimates for 
2017-18, which was Rs 82,293 crore.  

Under the Constitution, police and public order are 
state subjects.  However, the central government 
supplements the efforts of the states to fight 
extremism.85  The centre is responsible for the seven 
central armed police forces and the Delhi police.  In 
addition, it provides the infrastructure for border 
management and intelligence gathering.   

The central government also supports the expenditure 
towards the state police through centrally sponsored 
schemes for modernisation of police forces.  

Grants and loans to Union Territories: Around 
13.1% of the Ministry's budget, i.e. Rs 14,123 crore, 
has been allocated for grants and loans for the 
administration of union territories.  This includes the 
five union territories without legislatures (Andaman 
and Nicobar Islands, Chandigarh, Dadra and Nagar 
Haveli, Daman and Diu, Lakshadweep), and the two 
union territories with legislatures (Delhi and 
Puducherry).   

The 2018-19 budget estimates for grants and loans to 
union territories has seen a marginal decrease of 
0.9% from revised estimates for 2017-18, which was 
Rs 14,248 crore. 

Other items: Other miscellaneous expenditure items 
of the Ministry of Home Affairs have been allocated 
Rs 5,563 crore.  This includes subjects such as 
disaster management, rehabilitation of refugees and 
migrants, and administrative matters (relating to the 
census, the secretariat and Cabinet).  Expenditure on 

these items constitutes 5.2% of the Ministry's total budget for 2018-19.  

## Analysis Of Key Areas Of Expenditure

This section discusses the trends in expenditure of the police as it constitutes the largest proportion (82%) of the total budgetary allocation of the Ministry of Home Affairs.  

## Police

In 2018-19, Rs 87,887 crore has been budgeted for police expenditure.  Table 2 below details the allocations made to major items of expenditure related to police.   

% 
 
2016-17 
Actuals 
2017-18 
Revised 
2018-19 
Budget 
Change 
(BE 18-
19/RE 17-
18) 
Central Armed Police Forces 
52,474 
58,149 
62,741 
7.9% 
Delhi Police 
5,837 
6,553 
6,946 
6.0% 
Police Infrastructure* 
2,904 
4,470 
4,490 
0.4% 
Modernisation of police 
2,230 
2,577 
3,157 
22.5% 
Intelligence Bureau (IB) 
1,611 
1,883 
1,876 
-0.3% 
Border infrastructure  
1,614 
2,040 
1,750 
-14.2% 
Others** 
6,385 
6,621 
6,926 
4.6% 
Total 
73,054 
82,293 
87,887 
6.8% 

Source: Union Budget 2018-19; PRS. Notes: *Infrastructure for Delhi Police is covered separately under the head of 'Police Infrastructure'. ** Other items include heads such as schemes for safety of women, education and research, criminology and forensic science, Land Port Authority of India, and India Reserve Battalion. 

The Central Armed Police Forces (CAPFs) account for the largest share of expenditure under police (71%).  Figure 2 below shows the proportion of various items related to police expenditure.  

The total budget for police for 2018-19 has increased 
by 6.8% over the revised estimates of 2017-18.  
Figure 3 below shows the comparison of budget 
estimates and actuals for police over the last nine 
years.  

Sources: Union Budgets 2011-17; PRS. Note: Revised Estimates used for 2017-18.  
The actuals for police expenditure have been higher than budget estimates in five out of nine years.   

## Central Armed Police Forces

The Ministry of Home Affairs is responsible for 
seven central police forces: (i) Central Reserve Police 
Force (CRPF) which assists in internal security and 
law and order, (ii) Central Industrial Security Force 
(CISF) which protects vital installations (like, 
airports) and public sector undertakings, (iii) 
National Security Guards (NSG) which is a special 
counter-terrorism force, and (iv) four border guarding 
forces, Border Security Force (BSF), Indo-Tibetan 
Border Police (ITBP), Sashastra Seema Bal (SSB) 
and Assam Rifles (AR).   

Figure 4 shows the budget allocation to each of the 
seven central armed police forces for 2018-19, 
compared to the revised estimates of 2017-18.  

For 2018-19, the Central Reserve Police Force has been allocated 32.2% of the total budget for central armed police forces, i.e. Rs 20,268 crore.  The second highest expenditure is towards the Border Security Force which has been allocated 27.3% of the total budget, i.e. Rs 17,119 crore.   

## Vacancies

Data from the Bureau of Police Research and Development shows that vacancies among CAPFs has been a persistent issue.86  As of January 2017, the total sanctioned strength of the seven central armed police forces was 10,78,514.87  However, 15% of these posts (i.e. 1,58,591 posts) were lying vacant. Table 3 below shows the percentage of vacancies in the seven CAPFs over the last six years. 

| Actual       | % of         |
|--------------|--------------|
| vacancies    |              |
| Year         | Sanctioned   |
| strength (in | strength (in |
| lakhs)       | lakhs)       |
| 2012         |              |
|              |              |
| 8.9          |              |
|              |              |
| 7.6          |              |
|              |              |
| 14%          |              |
|              |              |
| 2013         |              |
|              |              |
| 9.1          |              |
|              |              |
| 8.3          |              |
|              |              |
| 9%           |              |
|              |              |
| 2014         |              |
|              |              |
| 9.3          |              |
|              |              |
| 8.7          |              |
|              |              |
| 6%           |              |
|              |              |
| 2015         |              |
|              |              |
| 9.5          |              |
|              |              |
| 8.9          |              |
|              |              |
| 7%           |              |
|              |              |
| 2016         |              |
|              |              |
| 9.7          |              |
|              |              |
| 9.0          |              |
|              |              |
| 7%           |              |
|              |              |
| 2017         |              |
|              |              |
| 10.8         |              |
|              |              |
| 9.2          |              |
|              |              |
| 15%          |              |
|              |              |

Sources: "Data of Police Organizations", Bureau of Police Research and Development, 2012-17; PRS. Note:  Figures for each year are as of January 1 of that year.  
In January 2017, the Sashastra Seema Bal had a very large number of vacancies (57%).  The Central Reserve Police Force, which accounts for 30% of the total sanctioned strength of the seven CAPFs, had a vacancy of 8%. 

## Service Conditions And Pay

The Standing Committee on Home Affairs in the year 2017 had expressed concern over working conditions of personnel of the border guarding forces (BSF, ITBP, SSB and AR).  The Committee observed that they had to work for 16-18 hours a day, with little time for rest and sleep.88  They were also not satisfied with medical facilities that had been provided at border locations. Further, the Committee noted that personnel of the Central Armed Police Forces had not been treated at par with the Armed Forces, in terms of pay and allowances.88  The demand for Paramilitary Service Pay, similar to Military Service Pay, had not been agreed to by the Seventh Central Pay Commission.88 In addition, the Committee observed that hard-area allowance for personnel of the border guarding forces was much lower as compared to members of the Armed Forces, despite being posted in areas with difficult terrain and harsh weather.   

## Border Infrastructure And Management

Allocations to border infrastructure and management include outlays for maintenance of border works, border check posts, border out posts, and capital outlays for various items including barbed wire fencing, construction of roads, and Hi-tech 

surveillance on Indo-Bangladesh and Indo-Pakistan 
borders. Additionally, it includes capital outlays for 
construction activities at India's international 
borders, and for setting up mobile check posts in 
coastal areas.  Table 4 shows the expenditure under 
this provision.     

## Infrastructure And Management (In Rs Crore)

 
2016-17 
Actuals 
2017-18 
Revised 
2018-19 
Budget 
% Change 
BE 18/19/ 
RE 17-18 
Maintenance and Border Check Post 
204 
263 
169 
-35.6% 
Capital Outlay 
1,410 
1,777 
1,581 
-11.0% 
Total 
1,614 
2,040 
1,750 
-14.2% 

Source: Union Budget 2018-19; PRS.  

For 2018-19, Rs 1,750 crore has been budgeted for 
border infrastructure and management.  This is 
14.2% lower than the 2017-18 revised estimates.  In 
2017-18, the budget estimates for border 
infrastructure and management was Rs 2,600 crore. 

Figure 5 below shows the expenditure (actuals) on 
border infrastructure and management for the last 
five years.  The expenditure on this item has 
increased on average by 2% over this period.  

Sources: Union Budgets 2015-18; PRS. Note: Revised Estimates used for 2017-18.  

## Delays In Project Implementation

The Standing Committee on Home Affairs observed 
in 2017 that infrastructure projects at borders have 
faced delays, particularly due to problems in land 
acquisition.88,89  Demands for compensation, by 
farmers residing in border areas, had not been met.88  
The Committee had also observed that funds 
allocated for infrastructure projects at the border have 
been underutilised.89  

The coastal security scheme is a part of border 
infrastructure and management.  The Standing 
Committee on Home Affairs had noted in 2017, that 
implementation of this scheme within the set 
timeframe has not been possible for reasons 
including delay in procurement of motor boats.88  
Various other issues that have affected coastal 

security include inadequate infrastructure of Indian Coast Guard (ICG) and coastal police forces, and lack of coordination between the Indian Navy, ICG, and coastal police.88  

## Institutional Mechanism For Border Security

In its report of 2017, the Standing Committee on Home Affairs examined the institutional mechanism in place for improving border security, particularly the functioning of agencies such as the National Intelligence Grid (NATGRID) and the Multi-Agency Centre (MAC).88 The NATGRID was created to connect intelligence and law enforcement agencies with organisations that provide data (such as banks, and airlines), to enhance counterterrorism capacity.  The Committee noted that various issues remain in implementation of the project including non-procurement of equipment, and several vacancies of technical consultants.88 The MAC was set up to coordinate intelligence inputs for counterterrorism.  Subsidiary Multi Agency Centres (SMACs) have been set up in various states for streamlining intelligence efforts. The Committee had observed that the contribution of state-level agencies has been low in the inputs received by the MAC, which may signal weak intelligence gathering capacity of states.88    

## Modernisation Of Police Forces (Mpf)

For 2018-19, the central government has made allocations towards four items related to modernisation of police force.  These include: (i) Modernisation of State Police Forces Scheme; (ii) the Crime and Criminal Tracking Network and Systems (CCTNS) scheme; (iii) Security related expenditure (SRE) scheme; and (iv) Special Infrastructure scheme (SIS) for Left Wing Areas.  The allocations over the last three years is outlined in Table 5 below. 

 
% Change 
BE 18-
2016-17 
Actuals 
2017-18 
Revised 
2018-19 
Budget 
19/RE 17-
18 
1,390 
1,766 
2,260 
28.0% 
SRE and SIS for LWE areas 
840 
811 
897 
10.6% 
Modernisation of State Police Forces and CCTNS Total 
2,230 
2,577 
3,157 
22.5% 
Source: Union Budget 2018-19; PRS. 

Financing of the MPF scheme has changed over the years.  Following recommendations of the Fourteenth Finance Commission, it was decided that the scheme would be delinked from central government funding from 2015-16 onwards.90  However the Standing Committee on Home Affairs, in 2015 and 2017, highlighted the strategic importance of the scheme, and the improvements brought about in infrastructure 

of state police forces throughout the country.89,91  In 
September 2017, the Union Cabinet approved an 
outlay of Rs 25,060 crore under the scheme, for the 
period 2017-18 to 2019-20.92  

For the year 2018-19, Rs 3,157 crore has been 
budgeted for the scheme.  This is an increase of 
22.5% over the 2017-18 revised estimates of Rs 
2,577 crore.  Figure 6 below shows the amount of 
modernisation funds (central and state) made 
available between 2010 and 2017.  Note that there is 
a sharp decline in central funds after 2015-16.  

 
Sources: "Data on Police Organizations", Bureau of Police Research and Development, 2011-17; PRS.   

## Modernisation Of State Police Forces (Mspf) Scheme

Funds from the MSPF scheme are utilised for 
improving police infrastructure through construction 
of police stations, and provision of modern 
weaponry, surveillance, and communication 
equipment.  Upgradation of training infrastructure, 
police housing, and computerisation are also 
important objectives under the scheme.  

Some of the issues regarding the MSPF scheme are 
analysed below.   

Misuse of funds:  The Standing Committee on Home 
Affairs noted in 2017 that funds meant for mobility, 
communication, weapons, and equipment have been 
misused by states for procuring vehicles.89  This 
misuse was happening despite releasing funds after 
obtaining utilisation certificates from states.    

Underutilisation of funds:  Data from the Bureau of 
Police Research and Development, shows that there 
has been a persistent problem of underutilisation of 
modernisation funds.93  In 2016-17, the centre and 
states allocated Rs 2,066 crore for modernisation, of 
which Rs 1,546 crore (75%) was utilised.  In the 
previous year, only 14% of the modernisation funds 
was utilised.  Figure 7 below shows the level of 
utilisation of modernisation funds between 2010-11 
and 2016-17.   

Construction:  Construction of well secured police 
stations and houses for police personnel is an 
important component of the scheme.94  The 
Comptroller and Auditor General (CAG) has 
observed that there were considerable delays in 
construction of residential and non-residential 
buildings in most states.94,95 

## Other Expenditure Items Disaster Management

The Ministry of Home Affairs is the nodal ministry 
for handling all types of disasters other than drought, 
which is handled by the Ministry of Agriculture.96  It 
is responsible for various aspects of disaster 
management including capacity building, mitigation, 
and response to natural calamities and man-made 
disasters.89  Table 6 below shows the allocation for 
various items related to disaster management.  

## Disaster Management (In Rs Crore)

2016-17 
Actuals 
2017-18 
Revised 
2018-19 
Budget 
% Change BE 18- 19/RE 17-18 
National Disaster Response Fund* 
6,450 
3,660 
2,500 
-31.7% 
Relief on Account of Natural Calamities 
741 
859 
955 
11.1% 
National Disaster Response Force 
710 
793 
864 
9.0% 
634 
630 
604 
-4.2% 
National Cyclone Risk Mitigation Programme (including World Bank assistance) Infrastructure for Disaster Management 
141 
203 
240 
18.2% 

Source: Union Budget 2018-19; PRS. *Allocation to the National Disaster Response Fund is made by the Ministry of Finance.    
Some of these allocations and issues related to disaster management are examined below. 

## National Disaster Response Fund

The Disaster Management Act, 2005, mandates the 
creation of a National Disaster Response Fund and 
State Disaster Response Funds.97  Relief assistance is 
provided to states from the National Disaster 
Response Fund in case of severe natural calamities, 
where the State Disaster Response Fund is 
insufficient to cover the required expenditure.98 
Allocations to the National Disaster Response Fund 
are made by the Ministry of Finance, though it is 
administratively controlled by the Ministry of Home 
Affairs.98  For the year 2018-19, a budgetary 
allocation of Rs 2,500 crore has been made to the 
fund, which is a 31.7% decrease from the revised 
estimates of 2017-18.  

The CAG, in 2013, observed that funds have been 
released to states from the National Disaster 
Response Fund, despite availability of balances in the 
State Disaster Response Fund. 99   

In 2015, the Standing Committee on Home Affairs 
examined the response to Cyclone Hudhud in states 
of Andhra Pradesh and Odisha.100  The Committee 
recommended that the National Disaster Response 
Fund should be expanded to cover reconstruction and 
mitigation components of disaster management.  
Further, advance amounts should be released to states 
when severe calamities occur, without waiting for 
assessment and clearance of the central government.  
In addition, the Committee found that only sixteen 
states (as of December 2015) had created State 
Disaster Response Funds.  

## National Cyclone Risk Mitigation Project

The National Cyclone Risk Mitigation Project 
(NCRMP) was launched by the Ministry of Home 
Affairs with the aim of minimising vulnerability in 
states and Union Territories that are prone to cyclone 
hazards.  Key objectives of the project include: (i) 
improving early warning dissemination systems, (ii) 
construction and maintenance of cyclone shelters, 
(iii) improved access and evacuation through 
construction of roads and bridges, and (iv) enhance 
capacity of local communities to respond to disasters.   

For 2018-19, a budgetary allocation of Rs 3.94 crore 
has been made to this project.  This is a 16.2% 
increase from the revised estimates for 2017-18, 
which was R 3.4 crore.  The Standing Committee on 
Home Affairs observed in 2017 that construction 
activity under the project had been delayed.89  Many 
of the shelters, roads, and bridges were still under 
execution, and several other projects were in various 
stages of finalisation, environmental clearance, and 
the tendering process. 

The NCRMP also contains a provision for 
expenditure on 'National Cyclone Risk Mitigation 
Project with World Bank Assistance', to reduce the 

vulnerability of coastal states which are prone to cyclone hazards.89 For 2018-19, a budgetary allocation of Rs 600 crore has been made for this provision.  It has decreased by 
4.3% from the 2017-18 revised estimates, which was Rs 690 crore.  

## National Disaster Response Force

The National Disaster Response Force (NDRF) is a specialised force that is responsible for disaster response and relief.  For 2018-19, the budget estimates for the NDRF is Rs 864 crore.  This is 9% 
84. Demand Nos. 46-55, Demand for Grants, Union Budget 2017- 18. 

85. "199th Report: Action taken by the Government on the recommendations/observations contained in the 197th Report on the Demands for Grants (2016-17) of Ministry of Home Affairs", Department Related Standing Committee on Home Affairs, February 8, 2017.  
86. "Data on Police Organizations", Bureau of Police Research and Development, 2012-17.   
87. "Data on Police Organisations", Bureau of Police Research and Development, 2017, http://bprd.nic.in/WriteReadData/userfiles/file/databook2017.pdf.  
88. "Border Security: Capacity Building and Institutions", Department Related Standing Committee on Home Affairs, April 11, 2017, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Co mmittee%20on%20Home%20Affairs/203.pdf. 89. "201st Report: Demands for Grants (2017-18) Ministry of Home Affairs", Department Related Standing Committee on Home Affairs, Rajya Sabha, March 15, 2017, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Co mmittee%20on%20Home%20Affairs/201.pdf.   
90. "Major Programmes under Central Assistance for State Plans", Union Budget 2015-16, https://content.indiainfoline.com/budget/2015/ub/bag/bag8.pdf. 91. 185th Report: Demand for Grants (2015-16) Ministry of Home Affairs", Department Related Standing Committee on Home Affairs, April 23, 2015, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Co mmittee%20on%20Home%20Affairs/185.pdf. 92. "Cabinet approves umbrella scheme of Modernisation of Police Forces", Press Information Bureau, 27th September 2017.  
93. "Data on Police Organizations", Bureau of Police Research and Development, 2011-17.   
higher than the revised estimates of Rs 793 crore, for 2017-18.   

## Recruitment Policy

The Ministry of Home Affairs constituted a Task 
Force in 2010 to review the Disaster Management 
Act, 2005, which submitted its report in 2013.101  The 
Task Force noted that personnel in the NDRF are 
recruited from different Forces and go back after a 
specified period.  The skills and expertise that they 
develop, may not be available for disaster response 
after they leave the force.   

94. "Compendium on Performance Audit Reviews on 
Modernisation of Police Force", Comptroller and Auditor General, 
http://www.cag.gov.in/sites/default/files/cag_pdf/Compendium_Pe
rformance_Audit_Reviews_Modernisation_Police_Force.pdf.    
95. "Performance Audit of Modernisation and Strengthening of 
Police Forces, Government of Uttar Pradesh", Comptroller and 
Auditor General, 
http://www.cag.gov.in/sites/default/files/audit_report_files/Report
_No.3_of_2017_Performance_Audit_of_Modernisation_of_Police
_Forces_Government_of_Uttar_Pradesh.pdf.    
96. Report of the Fourteenth Finance Commission, Government of 
India, 2014, 
http://www.thehinducentre.com//multimedia/archive/02321/14th_F
inance_Commi_2321247a.pdf.   
97. Sections 46 and 48, Disaster Management Act, 2005.  
98. "Operational Guidelines for Constitution and Administration of 
the National Disaster Response Fund", Ministry of Home Affairs, 
September 28, 2010, 
http://doe.gov.in/sites/default/files/Guidelines%20for%20National
%20Disaster%20Response%20Fund%20%28NDRF%29.pdf.   
99. "Report of the Comptroller and Auditor General of India on 
Performance Audit of Disaster Preparedness in India, 2013", 
Comptroller and Auditor General of India, April 23, 2013, 
http://www.saiindia.gov.in/english/index.html. 

100. "195th Report: Devastations caused by Natural Disaster 
Hudhud Cyclone in Andhra Pradesh and Odisha", Department 
Related Standing Committee on Home Affairs, December 22, 
2015, 
http://164.100.47.5/newcommittee/reports/EnglishCommittees/Co
mmittee%20on%20Home%20Affairs/195.pdf.   
101. "Report of the Task Force: A Review of the Disaster 
Management Act, 2005", Ministry of Home Affairs, March 2013, 
http://gbpihedenvis.nic.in/PDFs/Disaster%20Data/Reports/Report_
task_force_Disaster_management_act_2005.pdf.    

% Change RE 
2017-18 v BE 
% Change BE 
2018-19 v BE 
% Change BE 
2018-19 v RE 
Major Head 
2017-18 
Budget 
2017-18 
Revised 
2018-19 
Budget 
2017-18 
2017-18 
2017-18 
Police 
78,000 
82,293 
5.5% 
87,887 
12.7% 
6.8% 
Miscellaneous* 
5,100 
5,100 
0.0% 
4,793 
-6.0% 
-6.0% 
UTs without legislature 
11,116 
12,007 
8.0% 
11,857 
6.7% 
-1.2% 
Grants & Loans to Delhi & Puducherry 
2,241 
2,241 
0.0% 
2,266 
1.1% 
1.1% 
Cabinet 
730 
750 
2.7% 
770 
5.5% 
2.7% 
Total 
97,187 
1,02,391 
5.4% 
1,07,573 
10.7% 
5.1% 

Source: Union Budget 2017-18; PRS. Note: *Includes expenditure on disaster management, social security, rehabilitation of refugees, migrants, census, civil defence, secretariat. 

| Sanctioned    | % of      |
|---------------|-----------|
| CAPF          |           |
| Number of     |           |
| battalions    | strength  |
| Actual        |           |
| strength      | vacancies |
| CRPF          | 239       |
| 8%            |           |
|               |           |
| BSF           | 186       |
| 2%            |           |
|               |           |
| CISF          | 395       |
| ITBP          | 106       |
| AR            | 46        |
| SSB           | 69        |
| NSG           | -         |
| Total         |           |
| -             |           |

Source: "Data on Police Organizations", Bureau of Police Research and Development, 2017; PRS. Note: CRPF: Central Reserve Police Force; BSF: Border Security Force; CISF: Central Industrial Security Force; AR: Assam Rifles; ITBP:                
Indo Tibetan Police Force; SSB:  Sashastra Seema Bal; NSG: National Security Guard. 

|        | 2011-12    | 2012-13    | 2013-14    | 2014-15    | 2015-16    | 2016-17    | 2017-18    |
|--------|------------|------------|------------|------------|------------|------------|------------|
| CRPF   | 8,912      | 9,983      | 11,124     | 12,747     | 14,327     | 16,804     | 18,720     |
| BSF    | 8,160      | 9,095      | 10,294     | 11,687     | 12,996     | 14,909     | 16,189     |
| CISF   | 3,227      | 3,798      | 4,301      | 4,955      | 5,662      | 6,563      | 7,604      |
| ITBP   | 2,022      | 2,506      | 3,051      | 3,399      | 3,773      | 4,641      | 5,073      |
| AR     | 2,821      | 2,901      | 3,276      | 3,450      | 3,848      | 4,724      | 4,925      |
| SSB    | 1,750      | 2,179      | 2,719      | 3,148      | 3,418      | 4,045      | 4,595      |
| NSG    | 502        | 500        | 498        | 527        | 569        | 697        | 946        |
| Total  |            |            |            |            |            |            |            |
| 27,394 |            | 30,962     |            | 35,263     |            | 39,913     |            |

Sources: Union Budget 2013-14 to Union Budget 2017-18; PRS. Notes: Actuals used for all years except 2017-18.  Revised Estimates data used for 2017-18; CRPF: Central Reserve Police Force; BSF: 
Border Security Force; CISF: Central Industrial Security Force; AR: Assam Rifles; ITBP: Indo Tibetan Police Force; SSB:  Sashastra Seema Bal; NSG: National Security Guard. 

 
2010-11 
2011-12 
2012-13 
2013-14 
2014-15 
2015-16 
2016-17 
Funds available 
2,538 
1,150 
3,289 
6,777 
6,217 
9,203 
2,066 
Funds utilised 
1,928 
671 
708 
5,848 
3,566 
1,330 
1,546 
% of utilisation  
76% 
58% 
22% 
86% 
57% 
14% 
75% 

Sources: "Data on Police Organizations", Bureau of Police Research and Development, 2011-17; PRS.  

State government 
States 
Central government 
funds 
funds 
Total funds 
available 
Funds utilised 
% of utilisation 
Andhra Pradesh 
22.7 
9.5 
32.2 
NA 
NA 
Arunachal Pradesh  
2.2 
2.6 
4.7 
2.1 
44% 
Assam  
3.7 
NA 
NA 
60.0 
NA 
Bihar  
26.6 
17.3 
43.9 
20.0 
46% 
Chhattisgarh  
0.7 
NA 
NA 
0.7 
NA 
Goa  
1.4 
1.6 
2.9 
0.3 
9% 
Gujarat  
22.5 
15.8 
38.3 
18.7 
49% 
Haryana  
15.5 
14.9 
30.4 
24.4 
80% 
Himachal Pradesh  
0.4 
NA 
NA 
0.4 
NA 
Jammu & Kashmir  
62.6 
27.0 
89.6 
40.0 
45% 
Jharkhand  
22.4 
5.9 
28.3 
13.3 
47% 
Karnataka  
34.7 
23.1 
57.8 
15.8 
27% 
Kerala  
2.0 
32.6 
34.7 
13.1 
38% 
Madhya Pradesh  
3.4 
NA 
NA 
2.0 
NA 
Maharashtra  
10.3 
29.1 
39.4 
5.8 
15% 
Manipur  
6.7 
NA 
NA 
NA 
NA 
Meghalaya  
NA 
NA 
NA 
NA 
NA 
Mizoram  
6.2 
0.5 
6.7 
0.0 
1% 
Nagaland  
1061.0 
111.0 
1172.0 
1172.0 
100% 
Odisha      
15.4 
11.6 
27.0 
14.7 
54% 
Punjab  
31.8 
29.2 
60.9 
15.5 
25% 
Rajasthan  
30.1 
21.6 
51.7 
1.6 
3% 
Sikkim  
2.1 
NA 
NA 
0.3 
NA 
Tamil Nadu  
17.7 
11.8 
29.5 
5.3 
18% 
Telangana  
19.5 
13.0 
32.4 
2.2 
7% 
Tripura  
10.3 
0.7 
10.9 
6.5 
59% 
Uttar Pradesh  
70.0 
46.7 
116.7 
26.3 
23% 
Uttarakhand  
19.2 
2.4 
21.7 
11.9 
55% 
West Bengal  
41.0 
48.0 
89.0 
50.1 
56% 

Source: Data on Police Organisations 2017, Bureau of Police Research and Development; PRS. NA: Not available. 

## Demand For Grants 2018-19 Analysis Human Resource Development

The Ministry of Human Resource Development consists of two departments: (i) school education and literacy, and (ii) higher education.  In 2018-19, the Ministry has been allocated Rs 85,010 crore, the fifth highest allocation among all Ministries. The allocation constitutes 3% of the central government's estimated expenditure for 2018-19. This note presents the trends in expenditure, and discusses some of the issues related to the education sector.  
The Department of School Education and Literacy under the Ministry is broadly responsible for education imparted between the ages of 6 to 18 years, i.e., school education.   

 
Elementary education is a fundamental right imparted up to class 8 for children between 6- 14 years of age.  The government is mandated to provide elementary education to all children under the Right to Education (RTE) Act, 2009.   
 
Secondary education is imparted between classes 9 to 12 for children between 14-18 years of age.   
In 2018-19, the Department has been allocated Rs 50,000 crore, accounting for 59% of the Ministry's total allocation.   
The **Department of Higher Education** is responsible for higher and technical education, and training for students over 18 years of age.   

 
Higher education includes undergraduate and postgraduate courses, doctoral degrees, and certificates following the completion of 12 
years of schooling or equivalent.    
In 2018-19, the Department has been allocated Rs 35,010 crore, accounting for 41% of the Ministry's total allocation.   

## Overview Of Finances Budget Estimates 2018-19

The Ministry has been allocated Rs 85,010 crore in 2018-19.  This is a 3.8% increase over the revised estimate of 2017-18.102 Expenditure on education by the centre and the states as a proportion of the Gross Domestic Product (GDP) has been around 2% between 2014- 15 and 2017-18.103  Further, the expenditure on education (centre and states) as a percentage of the overall expenditure has been between 9% to 10%.103  The Committee constituted to examine the New Education Policy has proposed 6% of GDP as the minimum expenditure on education.104   
Table 1 provides the budget related figures for the Ministry.  For further details on the budgetary allocations, refer to the Annexure. 

% 
Department 
Actuals 
2016-
RE 
2017-
BE 
2018-
17 
18 
19 
change 
(RE to 
BE) 
42,989 
47,006 
50,000 
6.4% 
School Education & Literacy Higher Education 
29,026 
34,862 
35,010 
0.4% 
Total 
72,016 
81,869 
85,010 
3.8% 

Note: BE - Budget Estimate; RE - Revised Estimates. Sources: Expenditure Budget, Vol. 2, Ministry of Human Resource Development, 2018-19; PRS. 

Figure 1 depicts the major heads under which the 
Ministry spends its funds (as a percentage of its 
total allocation).  The Department of School 
Education and Literacy has seen a 6.4% increase in 
its allocation (Rs 50,000 crore) over the revised 
estimates of 2017-18 (Rs 47,006 crore).  For the 
Department of Higher Education, it was a 0.4% 
increase at Rs 35,010 crore over the revised 
estimate (Rs 34,862 crore). 

Sources: Expenditure Budget, Vol. 2, Ministry of Human Resource Development, 2018-19; PRS. 

## Budget Speech Highlights 2018-19

 
An integrated B.Ed. programme for teachers. Technology will also be used to upgrade the skills of teachers through the recently launched digital portal ''DIKSHA''. 
 
Increase in the digital intensity in education and moving gradually from ''black board'' to ''digital board''.  
 
By the year 2022, every block with more than 50% ST population and at least 20,000 tribal persons, will have an Ekalavya Model Residential School. Ekalavya schools will be on par with Navodaya Vidyalayas.  They will have facilities for preserving local art and culture, and providing training in sports and skill development. 
 
Launch of ''Revitalising Infrastructure and Systems in Education (RISE) by 2022'' to increase investments in research and related infrastructure in premier educational institutions.  It will have an investment of Rs 1,00,000 crore in the next four years. Higher Education Financing Agency (HEFA) would be structured for funding this initiative. 
 
Two new Schools of Planning and Architecture, to be selected on challenge mode.  Additionally, 18 new Schools of Planning and Architecture will be established in IITs and NITs as autonomous schools. 
 
Prime Minister's Research Fellows Scheme to identify 1,000 best B.Tech students each year from premier institutions and provide them facilities to do 
Ph.D in IITs and IISc. 

## Department Of School Education And Literacy

In 2018-19, the Department of School Education and Literacy has been allocated Rs 50,000 crore, a 6.4% increase over the revised estimates of 2017- 18.102   In 2017-18, the Department spent Rs 650 crore over the budgeted amount (Rs 46,356 crore).  
Figure 2 shows the allocation of the Department of School Education and Literacy over the past 10 years (2008-18). In the past 10 years, the highest allocation was given in 2014-15 at Rs 55,115 crore.  Note that in 2015-16, the allocation was reduced by 25%.  This may be on account of a greater devolution of funds to the states in pursuance of the recommendations of the 14th Finance Commission.  The allocation has been on an upwards trajectory since then but this year the annual increase in allocation has fallen in comparison to the last two years.  The Compound Annual Growth Rate (CAGR) following the 14th Finance Commission until now has been 4%.  CAGR is the annual growth rate over a certain period of time. 

 
Note: Revised estimates have been used for 2017-18 and budget estimates for 2018-19. Sources: Union Budgets, 2008-18; PRS. 

Figure 3 provides the major heads of financial 
allocation under this Department for 2018-19.  In 
2018-19, expenditure on centrally sponsored 
schemes (Sarva Shiksha Abhiyan (SSA), Mid-Day 
Meal Programme in Schools (MDMS), and 
Rashtriya Madhyamik Shiksha Abhiyan (RMSA)) 
constitute 81% of the estimated spending of the 
Department of School Education and Literacy.  
Note that the programmes of SSA and MDMS 
focus on school education while RMSA focusses 
on secondary education. 

 
Sources: Expenditure Budget, Ministry of Human Resource Development, Union Budget, 2018-19; PRS. 

the actual expenditure  (2010-17) (in Rs crore) 
Year 
Budget 
estimate 
Actuals 
Actuals/BE (%) 
2010-11 
33,214 
36,433 
110% 
2011-12 
41,451 
40,641 
98% 
2012-13 
48,781 
45,631 
94% 
2013-14 
52,701 
46,856 
89% 
2014-15 
55,115 
45,722 
83% 
2015-16 
42,220 
41,800 
99% 
2016-17 
43,554 
42,989 
99% 
2017-18 
46,356 
47,006* 
101% 

Note: BE - Budget Estimate. *Revised Estimate Sources: Union Budgets, 2015-18; PRS. Table 3 presents the details of the Department's allocation in 2018-19. 

Education and Literacy in 2018-19 (in Rs crore) 
% 
RE 
2017-
BE 
2018-
Major Head 
Actuals 
2016-17 
18 
19 
change 
(RE to 
BE) 
 21,685  
23,500  
 26,129  
11.2% 
Sarva Shiksha Abhiyan 
 9,475  
10,000  
 10,500  
5.0% 
National Programme of Mid-Day Meal in Schools Autonomous bodies 
 6,902  
 7,952  
 7,548  
-5.1% 
 3,698  
 3,915  
 4,213  
7.6% 
Rashtriya Madhyamik Shiksha Abhiyan 
 817  
 841  
 871  
3.6% 
Teachers Training and Adult Education Scholarships 
 84  
 602  
 556  
-7.7% 
Others 
328 
196 
183 
-6.4% 
Total 
42,989 
47,006 
50,000 
6.4% 

Note: BE - Budget Estimate; RE - Revised Estimates. Sources: Expenditure Budget, Ministry of Human Resource Development, Union Budget 2018-19; PRS.  

 
Sarva Shiksha Abhiyan (SSA):  Allocation to 
SSA in 2018-19 has increased by 11.2% (as compared with revised estimates of 2017-18) to Rs 26,129 crore.  SSA has been implemented since 2000 to universalise elementary education and promote retention of children in the school system.  After the RTE Act, 2009 was enacted, SSA was subsumed 

under it.  RTE guarantees the right to free and 
compulsory elementary education for children 
between the ages of 6 and14 years in a 
neighbourhood school.105  

There exists gaps between demand and actual 
allocation for the SSA and RTE.106  For 
example, the allocation of Rs 23,500 crores as 
budget estimate for 2017-18 is against a 
demand of Rs 55,000 crore.107  Further, 
Standing Committees have recommended 
increased funding for the SSA and sufficient 
allocations for states requiring additional 
resources.108,109  

Further, the Standing Committee on Human 
Resource Development (2017) noted that 
states have not earmarked funds for priority 
areas in education like SSA out of the 
increased fund devolution to states post the 
recommendations of the 14th Finance 
Commission.110  It recommended that the 
states must proportionately adjust the 
increased devolution of funds for education.110 

 
Mid-Day Meal Scheme (MDMS):  
Expenditure on Mid-Day Meal Scheme (MDMS) increased by about 5% from the revised estimates of 2017-18.  The MDMS targets children in the same age group as covered by the SSA (6 to 14 years).  In addition to promoting enrolment, retention and attendance by incentivising the children to come to school for meals, the scheme also aims to improve nutritional levels among children.  It covers children in government and government-aided schools.   

Most states did not follow the central 
government's guidelines on delivering food 
grains at the school.111  There were also 
instances where due to the existence of a long 
supply chain, the supplied food grains got 
adulterated and pilfered.111  

 
Autonomous bodies:  Autonomous bodies 
like the National Council of Educational Research and Training, and Kendriya Vidyalaya Sangathan saw a decrease in their allocation by 5.1% and were allocated Rs 7,548 crore in 2018-19. 
 
Scholarships:  Scholarships saw a decrease of 
7.7% in its allocation in 2018-19.  Note that last year, allocation to scholarships increased by 611% (2017-18) to an allocation of Rs 602 crore from revised estimates of 2016-17.  
 
Rashtriya Madhyamik Shiksha Abhiyan 
(RMSA):  The RMSA is aimed at secondary 
education (classes 9-12).  It aims to enable universal access to secondary education by 2017 and universal retention by 2020.112  It has been recommended that RMSA should be 

in step with SSA and ensure 100% transition 
of every child from the upper primary to 
secondary stage. 113  Note that under RMSA, 
during 2015-16, an amount of Rs 3,562 crore 
out of a budgeted amount of Rs 3,565 crore 
was utilised, which implies an almost 
complete utilisation.  Table 4 captures the 
expenditure for SSA and RMSA.  The 
difference in the amount of funds being spent 
on elementary education (class 1-8) and 
secondary education (class 9-12) is evident. 

Further, the Standing Committee on Human 
Resource Development noted that the varying 
regional attendance levels at the secondary 
education level reflects a regional imbalance in 
the coverage of RMSA.107 

 
SSA 
RMSA 
2014-15 
 
 
Expenditure* 
41,910 
5,407 
2015-16 
 
 
Expenditure* 
44,227 
6,879 
2016-17 
 
 
Expenditure* 
48,858 
7,713 

Source:  Starred Question no.115, Ministry of Human Resource Development, Rajya Sabha, Answered on December 28, 2017; PRS. * : Expenditure shown above is against receipts from central release, state share release, and unspent balance of previous year, if any. 

Issues in school education 

## Enrolment, Transition And Dropout Rates

Enrolment:  The Gross Enrolment Ratio (GER) is the student enrolment as a proportion of the corresponding eligible age group in a given year.  
GER in classes 1-5 reduced from 114% in 2008-09 to 100% in 2014-15.  The above-100% enrolment rate in 2008-09 indicates that students enrolled in classes 1-5 included those younger than six or older than 10 years.  In 2014-15, enrolment in classes 1-5 was about 100%, which signals a more age appropriate (six to 10 years) class composition (see Figure 4).  
Sources:  Education statistics at a glance, Ministry of Human Resource Development, 2016; PRS. 

India's enrolment rate in primary education (class 
1-5) is comparable to that of developed countries.  
However, it falls behind these countries after class 
6 (see Figure 5). 

Between 2008-09 and 2014-15, the proportion of 
students enrolled in class 1-8 in government 
schools declined from 71% to 62%, implying an 
increasing preference for private schools.114   

 
Sources:  Education statistics at a glance, Ministry of Human Resource Development, 2016; PRS. 

Attendance:  Attendance is the ratio of the 
number of persons in the official age group 
attending a particular class-group to the total 
number persons enrolled in school in that age-
group.  The attendance for both boys and girls falls 
as the level of education rises in school education.  
There is hardly any difference between the 
attendance of boys and girls (see Figure 6). 

Sources:  Key Indicators of Social Consumption in India: Education, NSSO, 2014; PRS. 

Transition and dropouts: The dropout rate peaks 
at the secondary level (class 9-10) at 17% as 
compared to 4% in elementary school (class 1-8) 
and 2% in upper secondary school (class 11-12) 
(see Figure 7).  This is also reflected in the 

transition rates in school education where the lowest transition rate is at the secondary level (class 10 to 11) at 69%.   Note that a transition rate below 100% indicates that the students are held back or have dropped out of school.   
Sources:  Education statistics at a glance, Ministry of Human Resource Development, 2016; PRS. 

Under the RTE Act, a child cannot be expelled or detained until the completion of elementary education (until class 8).  This may explain the differential trends between the enrolment, dropout, and transition rates for elementary education and secondary education.  Further, with regard to access to secondary school, for every three upper primary schools there is one secondary school.115 According to RMSA statistics, four states where the ratio of upper primary school to secondary school is a cause of concern are Uttar Pradesh, Bihar, Jharkhand and Meghalaya.115 Further, while 73% allocation of the Department on School Education has been made on SSA and MDMS (focussed on elementary education), only 8% has been allocated to RMSA (focussed on secondary education). According to NSSO data (71st round) on reasons for dropping out (for the age group 5-29 years), the key reasons for females dropping out is to engage in domestic activities (30%), lack of interest in education (16%), and marriage (14%).   On the other hand, the key reasons for males dropping out is to engage in economic activities (31%), lack of interest in education (24%), and financial constraints (24%).114 

## Quality Of Learning

Elementary education:  Based on the high enrolment and low dropout rates in elementary education, it can be inferred that children are being retained in schools for longer.  However, there have been some adverse observations regarding the learning outcomes of such children.  The Central Advisory Board on Education (CABE, 2014), National Achievement Survey (2012), and the Economic Survey (2016-17) observed declining learning levels in elementary education even after the implementation of the RTE Act. 116,117,118   

As per the National Achievement Survey, the 
performance of students in 2015 was poorer than in 
2012.  In 2015, on average, Class 5 students in 34 
states/ UTs obtained 45%  marks in reading 
comprehension, and 46% in mathematics.119  For 
reading comprehension, 19 states have scores in 
2015 that are lower than the scores in 2012.  Only 
in two UTs, the average achievement scores in 
2015 were significantly above those of 2012 (see 
Annexure).   

For mathematics, 20 states have scores in 2015 that 
are lower than 2012.  Only in 3 states/UTs, the 
average achievement scores in 2015 were 
significantly above those of 2012 (for more details, 
see Annexure). 

## Reconsidering The No Detention Policy

In recent years, two expert committees reviewed the nodetention provision in the RTE Act and recommended it be removed or be discontinued in a phased manner.116,104 The RTE (Second Amendment) Bill, 2017 was introduced in Lok Sabha on August 11, 2017 to amend the RTE Act to remove the provision related to no- detention in the Act to address the low learning outcomes.  It is currently pending in Parliament. government may decide to allow schools to detain him.   

Under the RTE Act, children are enrolled in the 
class that corresponds to their age, irrespective of 
their learning levels.  This results in a situation 
where in the same class, depending on when they 
are enrolled in school, children may have different 
learning requirements.  It has been recommended 
that special training be organised and is of flexible 
duration to enable the child to be at par with other 
children and ensure his integration with the class.120  

Secondary education:  In the National 
Achievement Survey (2015) for class 10, in the 
English subject, 24% students were in the range of 
0-35% score and 61% students were in the range of 
36-50% score.  Further, 35% students were in 0-
35% scores, 49% students were in the range of 36-
50% scores in Mathematics.121 

## Other Issues

Teachers related issues:  Experts have identified 
various issues with regard to the role of teachers to 
address the challenges confronting elementary 
education.122,120,104  These include: (i) low teacher 
accountability and appraisal, (ii) poor quality of the 
content of teacher-education and changes required 
in the curriculum of B. Ed and D. Ed courses, (iii) 
need for continuous in-service teacher training and 

upgradation of skill set, (iv) inadequate pupil teacher ratio and deployment of teachers for noneducational purposes, (v) teacher vacancies, and (vi) excessive recruitment of contract/para teachers.  
Some states have done exceedingly well in maintaining its teachers' workforce, some states like Bihar, Uttar Pradesh, Jharkhand, Punjab, Assam are lagging behind.123 In 2016, 3,48,314 posts of teachers were vacant under the SSA and 1,06,906 posts under RMSA.124,110  Further, it has been observed that there are 13,64,553 untrained in-service teachers.125 Teacher training institutes such as DIETs are also experiencing many teacher vacancies.126  The presence of para/temporary teachers instead of permanent teachers contributes to the deterioration of quality of education.  The CABE Committee (2005) recommended that to ensure quality secondary education, para/temporary teachers must be done away with.  Instead, fully qualified teachers with a complete salary and benefits must be hired.127  

## Teacher Related Bills

 
The National Council for Teacher Education (Amendment) Bill, 2017:  The Bill is currently pending in Parliament.  It amends the National Council for Teacher Education Act, 1993.  The Act establishes the National Council for Teacher Education (NCTE).  The NCTE plans and co-ordinates the development of the teacher education system throughout the country. The Bill seeks to grant retrospective recognition of certain teacher education institutions and permission to start new courses. 
 
The Right of Children to Free and Compulsory Education (Amendment) Bill, 2017:  The Bill was passed by Parliament in 2017.  It amends the RTE Act, 2009 by extending the deadline for teachers to acquire the prescribed minimum qualifications for appointment.  Those teachers who do not possess the minimum qualifications as on March 31, 2015 will acquire the minimum qualifications within a period of four years i.e. by March 31, 2019. 
School accountability:  In 2014, CABE 
recommended introducing a performance management system for all teachers, school leaders, and department officials, with performance measures linked with student learning outcomes.116 Such measures of school accountability exist in other countries. For example, in the United States, under the No Child Left Behind Act, schools are required to do annual assessment of learning outcomes in reading and mathematics for students from classes 3 to 8.  If the school fails to achieve minimum test scores then the consequences include removal from service of teachers or the headmaster, school restructuring or closure, and an option for students to transfer to another school.128  

Nature of assessment:  Under the RTE Act, the 
Continuous and Comprehensive Evaluation (CCE) 
is the evaluation mechanism for elementary 
education.  CCE (e.g., paper-pencil test, drawing 
and reading pictures, and expressing orally) does 
not mean absence of evaluation, but it means an 
evaluation of a different kind from the traditional 
system of examinations.  CCE has not been 
adequately implemented or monitored.116  It has 
been recommended that proper design of 
assessment and using this information can help 
improve the quality and innovation in terms of 
teaching and learning.129 
 

## Department Of Higher Education

The Department of Higher Education has been 
allocated Rs 35,010 crore in 2018-19, a 0.4% 
increase over the revised estimate of 2017-19.  This 
is an increase of Rs 148 crore over the revised 
estimates of 2017-18.  Figure 8 depicts the 
allocation to the Department of Higher Education 
since 2007-08.  In terms of year on year increase, 
2015-16 saw the highest dip in the allocation to the 
Department of Higher Education.  This may be on 
account of a greater devolution of funds to the 
states in 2015-16 in pursuance of the 
recommendations of the 14th Finance Commission.   

 
Note: Revised estimates have been used for 2017-18 and budget estimates for 2018-19. Sources: Union Budgets, 2006-18; PRS. 

A NITI Aayog report (2017) notes that even after 
the central transfers, low income states with low 
revenue capacity spend significant lower amounts 
on social and economic services.130    It also 
observed that as a result, despite such transfers, 
public expenditures in sectors like education are 
higher in more developed states.       

Table 5 indicates the actual allocation of the 
Department compared to the budget estimates of 

that year.  The utilisation has been over 90% of the budget estimates in the last three years as seen in the table.  In 2016-17 and 2017-18, it even crossed 100% utilisation.  

the actual expenditure (2010-17) (in Rs crore) 
Year 
Budget 
Estimate 
Actuals 
Actuals/BE (%) 
2010-11 
16,690 
15,472 
93% 
2011-12 
21,912 
19,505 
89% 
2012-13 
25,275 
20,423 
81% 
2013-14 
26,750 
24,465 
91% 
2014-15 
27,656 
23,152 
84% 
2015-16 
26,855 
25,439 
95% 
2016-17 
28,840 
29,026 
101% 
2017-18 
33,330 
34,862* 
105% 

Note: BE - Budget Estimate. *Revised Estimate Sources: Union Budgets, 2010-18; PRS. 

Figure 9 provides the major heads of financial allocation under the Department for 2018-19. 

 
About 51% of the Department's expenditure 
has been allocated to central universities (as grants), Indian Institutes of Technology (IITs), and statutory and regulatory bodies (University Grants Commission (UGC) and All India Council for Technical Education (AICTE)) (see Table 6).  All the three categories have however registered a decrease in their allocation over the revised estimates of 2017- 18 by 11%, 23%, and 4% respectively.  In 2018-19, they have been allocated Rs 6,445 
crore, Rs 6,326 crore, and Rs 5,208 crore respectively. 

 
The bulk of the enrolment in higher education is handled by state universities and their 
affiliated colleges.  However, these state 
universities receive very small amounts of grants from the Union Budget.  Nearly 65% of the University Grants Commission (UGC) budget is utilised by the central universities and their colleges while state universities and their affiliated colleges get only the remaining 35%.131   The Standing Committee on Human Resource Development has recommended that the mobilisation of funds in state universities should be explored through other means such as endowments, contributions from industry, alumni, etc.131 

% 
2016-
Major Heads 
17 
2017-
18 RE 
2018-
19 BE 
Actuals 
change 
(RE to 
BE) 
Grants to Central Universities 
6,356 
7,261 
6,445 
-11.2% 
IITs 
5,380 
8,245 
6,326 
-23.3% 
UGC and AICTE 
4,952 
5,408 
5,208 
-4% 
NITs 
2,860 
3,668 
3,203 
-12.7% 
- 
250 
2,750 
 
1000% 
Higher Education Financing Agency (HEFA) Student Financial Aid 
2,090 
2,244 
2,600 
15.9% 
RUSA 
1,416 
1,300 
1,400 
7.7% 
IIMs 
723 
1,068 
1,036 
-3% 
IISERs 
1,199 
715 
689 
-3.6% 
Digital India-e-learning 
452 
518 
456 
-12% 
IIITs 
176 
369 
364 
-1.5% 
Research and Innovation 
215 
319 
350 
9.7% 
Others 
3,208 
3,496 
4,182 
20% 
Grand Total 
29,026 
34,862 
35,010 
0.4% 

Sources: Expenditure Budget, Vol. 2, Ministry of Human Resource Development, Union Budget 2018-19; PRS.  

 
Student Financial Aid has seen an increase and has been allocated Rs 2,600 crore, a 16% increase over the revised estimates of 2017-18. Research and Innovation have received an increase in allocation by about 10% (over revised estimates) at Rs 350 crore. 
 
Expenditure on Digital India e-learning has been estimated at Rs 456 crore, which is down by 12% from the revised estimates of 2017-18. Note that it had seen a decline in 2017-18 of 3.8% over the revised estimates of 2016-17. 
 
The funding allocation for Rashtriya Uchchtar Shiksha Abhiyan (RUSA) has increased by 8% at Rs 1,400 crore (from the 2017-8 revised estimates).  Note that about Rs 116 crore was underspent as per the revised estimates for 2017-18 following the budget estimates.  As of 
September, 2017, about 46% of the total central share was released and 24.7 % of the released fund was utilised.132 

 
The Higher Education Financing Agency 
(HEFA) has been allocated Rs 2,750 crore for 
2018-19 after an initial allocation of Rs 250 crore in 2017-18.  HEFA will promote the creation of high quality infrastructure in premier educational institutions.  All the centrally funded higher educational institutions would be eligible for joining as members of the HEFA.133  Note that it was envisaged that HEFA will be jointly promoted by an identified promoter and the Ministry of Human Resource Development with an authorised capital of Rs 2,000 crore.  The government equity will be Rs 1,000 crore.  The HEFA will be formed as a Special Purpose Vehicle within a public sector bank or a nonbanking financial company.   
Expenditure on education as a proportion of GDP has been around 3 per cent during the period 2008- 09 to 2014-15.134  Out of this figure, roughly 1% is spent on higher education in India.  However, there is a lack of data available on private sector spending in this sector.  Internationally in terms of public expenditure, USA spends about 1% of its GDP on higher education, Canada spends 1.3%, Chile spends 1% and Brazil spends 0.9%.135 There has been underutilisation of funds by central and state universities, including unspent balances lying with central universities.106  Committees have stressed on the need to curb delays on the part of the UGC and the MHRD in disbursing budgetary allocations to the various universities.136 Committees have noted that such a consistent trend of unspent balances is leading to lower allocations against the MHRD's demands for funds, resulting in a 'vicious circle'.137  For example, Rs 689 crore was left unspent with the autonomous bodies which got one of the highest allocations under higher education in 2016.138  This leads to a significant gap between the proposed demand and the allocation of budget to MHRD as well.139   

## Issues In The Higher Education Sector Enrolment Levels

In India, GER in higher education has more than doubled over a period of 11 years, going from 9% in 2002-03 to 24.5% in 2015-16 (see Figure 10).140,141   

A GER of 24.5% implies that 24.5% of people 
in the target age-group are enrolled in 
universities.  The GER for higher education in 
India is fairly low compared to other countries 
such as the UK and USA, as seen in Figure 11.   

Sources:  Education statistics at a glance, Ministry of Human Resource Development, 2016; PRS. 

Student enrolment is highest at the UG level 
(79.3%) followed by PG (11.3%).  The recent 
AISHE 2015-16 report reveals that the student 
enrolment decreases as one goes further higher 
from the under graduate level of education.141   

## Regulatory Issues In Higher Education

It has been observed that the Indian higher 
education is regulated by a multiplicity of 
regulatory agencies, with overlapping mandates.142  
These bodies are the University Grants 
Commission (UGC), All India Council for 
Technical Education (AICTE) and the various 
professional councils.  Citing overregulation and 
under governance, various committees have 
highlighted the need for an overarching regulatory 
body by subsuming the multiple existing regulatory 
bodies.142,143  Such a body would be responsible for 
monitoring standards and licensing accreditation 
bodies in the sector. 

The TSR Subramanian Committee report (2016) on 
the New Education Policy also recommended 
bringing in the National Higher Education 
Promotion and Management Act which would 
replace the existing separate laws governing 
individual regulators in higher education.104  In the 
Union Budget of 2017-18, the Finance Minister 
mentioned that reforms would be undertaken 
concerning the functioning of UGC.144 

## Autonomy In Higher Education

The Indian Institutes of Management Bill, 2017 was passed on December 19, 2017 by Parliament.  Under the Bill, the autonomy being granted to the IIMs is greater than the autonomy available to institutions like IITs, AIIMS and Delhi University.  The role of the central government or the regulator in these other institutions is greater than what has been envisaged under the Bill.  This implies unequal levels of autonomy across different institutions of higher education in areas including introduction of new courses and the Director's pay.  Recent media reports have quoted the Union Minister of Human Resource Development, Mr. Prakash Javadekar saying that IIMs have been accorded full autonomy and this will be done for IITs too as well as colleges.145 In February 2018, the University Grants Commission (UGC) (Categorisation of Universities (only) for Grant of Graded Autonomy) Regulations were released.146  The UGC will categorise universities into three categories based on various parameters.  Depending on the category of the university, there would be a certain extent of autonomy for the universities on aspects including: (i) starting a new course, (ii) opening constituent units/off-campus centres, (iii) hiring foreign faculty, and (iv) admitting foreign students. 

## Quality Standards In Higher Education

There are two accrediting institutions in higher 
education– namely National Board of Accreditation 
(NBA) established by AICTE, and the National 
Assessment and Accreditation Council (NAAC) 
established by UGC.  In terms of the quality of 
universities, out of 323 universities accredited by 
the NAAC in the most recent cycle, only 23 
universities have been given an 'A+' grade.147 

The Standing Committee (2016) notes that 
accreditation of higher educational institutions 
needs to be at core of the regulatory arrangement in 
higher education.131  Further, quality assurance 
agencies should guarantee basic minimum 
standards of technical education to meet the 
industry demand for quality manpower.  Credit 
rating agencies, reputed industry associations, 
media houses and professional bodies should be 
encouraged to carry forward the process of rating 
of Indian universities and institutions.   

## Lack Of Employable Skills

Lack of employable skills in students of technical 
education has been observed by the Standing 
Committee.131  Identification of skill gaps in 
different sectors and offering courses for enhancing 
employability in them has been recommended.  

Some strategies in this regard can include: (i) 
Industry Institute Student Training Support, (ii) 
Industrial Challenge Open Forum, (iii) Long Term 
Student Industry Placement Scheme, and (iv) 
Industrial Finishing Schools.131 

## Fee Structure And Private Sector Participation In Higher Education

It has been observed that many private institutions 
of higher education charge exorbitant fees.  In the 
absence of well-defined norms, fees charged by 
such universities have remained high.148  UGC 
regulates fees for courses offered in deemed 
universities, to an extent.  They state that the fees 
charged shall be directly linked to the cost of 
running the course and the institution shall ensure 
non-commercialisation of education.  In 2002, the 
Supreme Court ruled that the fees charged by 
private unaided educational institutes could be 
regulated.149  Also, while banning capitation fee 
(fees exceeding the tuition fee), it allowed institutes 
to charge a reasonable surplus.  

The All India Council for Technical Education 
(AICTE) had constituted a Committee in 2014 
under Justice Srikrishna to recommend the fee to be 
charged by the private technical educational 
institutes in the country.150  The Committee 
recommended the maximum tuition and 
development fee to be charged. 

A UGC report in 2012 noted that the distribution of 
public and private institutions in India is skewed.  
This is because enrolment in public universities is 
largely concentrated in conventional disciplines 
(arts and sciences) whereas in private institutions, 
more students are enrolled in market-driven 
disciplines (engineering, management, etc.).151 
Thus, with a rise in private universities, there is a 
mismatch of the demand and supply of subject 
disciplines in the private sector education. 

It has been noted that while private investment is 
high in the disciplines of engineering, medicine and 
management; majority of enrolment is still taking 
place in the traditional disciplines like arts.  
However, increasing number of students are opting 
for technical and professional courses, for future 
employability purposes.  Committees have stated 
that the private sector should not confine itself to 
the commercially viable sectors such as 
management, accountancy, medicine, etc., as this 
leads to the responsibility of maximising enrolment 
with the government.142 

Further, committee recommendations have not 
encouraged for-profit private educational 
institutions.142  However, it is essential to stimulate 
private investment in higher education to extend 
educational opportunities and private intervention 
would be key in bridging the gap in investment 
from the government in the education sector.   

## Teacher Related Issues

According to UGC, out of the total teaching posts of 17,006 in various UGC funded Central Universities, 6,141 teaching posts are lying vacant.152  Further, in 20 Indian Institute of Management (IIMs), out of total sanctioned teaching posts of 1,007, 273 posts are lying vacant; and in 7 IISERs and IISc, Bangalore, the total number of sanctioned teaching posts is 1,117 and 153 are lying vacant.153 The Standing Committee on Human Resource Development reasoned that this could be due to two reasons: (i) young students don't find the teaching profession attractive; or (ii) the recruitment process is long and involves too many procedural April 30, 2016, http://www.nuepa.org/New/download/NEP2016/ReportNEP.pdf . 105  The Right of Children to Free and Compulsory Education (RTE) Act, 2009. 106 "Report no. 280: Demands for Grants 2016-17 (Demand No. 

51) of the Department of School Education & Literacy", Standing Committee on Human Resource Development, April 27, 2016, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20HRD/280.pdf. 107 "Report no. 301: Action taken by the government on the observations /recommendations contained in the two hundred and ninetieth report on the demands for grants (2017-2018) of the Department of School Education and Literacy, Ministry of Human Resource Development", Standing Committee on Human Resource Development, February 9, 2018, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C
ommittee%20on%20HRD/301.pdf. 108  "Report no. 250: Action Taken Report on 244th Report on Demands for Grants 2012-13", Department of School Education and Literacy, Standing Committee on Human Resource Development, February 26, 2013, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20HRD/250.pdf. 109  "Report no. 285: Action Taken Report on 280th Report on Demands for Grants 2016-17", Department of School Education and Literacy, Standing Committee on Human Resource Development, December 16, 2016, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20HRD/285.pdf. 110 "Report no.283: The Implementation of Sarva Shiksha Abhiyan and Mid-Day-Meal Scheme", Standing Committee on Human Resource Development, Rajya Sabha, December 15, 2016, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20HRD/283.pdf. 111 Outcome Budget, 2016-17, Ministry of Human Resource Development, http://mhrd.gov.in/sites/upload_files/mhrd/files/documentreports/Outcome_16-17.pdf 112  Rashtriya Madhyamik Shiksha Abhiyan, Ministry of Human Resource Development, http://rmsaindia.gov.in/en/component/rmsastates/?view=rmsasta tes&Itemid=130&id=india  

formalities.131  In 2008, the Bhargava Committee 
observed that the government determined pay of 
the faculty has been a deterrent in attracting 
adequate faculty at IIMs.154   

The Committee recommended that the recruitment 
process should start well before a post is vacated.154  
In addition, to make the profession of teaching 
more lucrative, faculty should be encouraged to 
undertake consultancy projects and be provided 
financial support for start-ups.  The Standing 
Committee did not consider that raising the age of 
faculty to 65 is a desired and permanent measure 
which will help strengthening the faculty position 
in central universities.132 

113  Fourth Joint Review Mission, Rashtriya Madhyamik Shiksha Abhiyan, 2014, http://mhrd.gov.in/sites/upload_files/mhrd/files/upload_docume nt/4th%20JRM%20AM%202014%2008%2023%20FINAL%20 _2_.pdf. 114 Key Indicators of Social Consumption in India: Education (2014), NSS (71st Round), http://mail.mospi.gov.in/index.php/catalog/160. 115  Trends under RMSA, Rashtriya Madhyamik Shiksha Abhiyan, http://rmsaindia.gov.in/images/Trends_and_Indicators_under_R MSA.pdf 116. "Report of CABE Sub Committee on Assessment on 
implementation of CCE and no detention provision", 2015, 
Ministry of Human Resource Development, http://mhrd.gov.in/sites/upload_files/mhrd/files/d ocument-reports/AssmntCCE.pdf. 117 A summary of India's National Achievement Survey, Class VIII, 2012, National Council of Educational Research and Training, http://mhrd.gov.in/sites/upload_files/mhrd/files/upload_docume nt/11-March-National-Summary-Report-NAS-Class-VIII.pdf. 118  Economic Survey, 2016-17, http://indiabudget.nic.in/es2016- 17/echapter_vol2.pdf. 119  "What students of class V know and can do", National Achievement Survey, Class V (Cycle 4), 2015, 
http://www.ncert.nic.in/departments/nie/esd/pdf/NAS_Class_V_
(Cycle%204)_Summary_Report_National.pdf.  
120 "Report to the People on Education", 2011-12, Ministry of Human Resource Development, http://mhrd.gov.in/sites/upload_files/mhrd/files/documentreports/RPE_2011-12.pdf. 121 National Achievement Survey (2015), Class X, National Council of Educational Research and Training, http://www.ncert.nic.in/departments/nie/esd/pdf/NASSummary. pdf. 122 "Implementation of Right of Children to Free and 
Compulsory Education (RTE) Act, 2009", Comptroller and 
Auditor General of India, July 21, 2017, http://www.cag.gov.in/content/report-no23-2017-complianceaudit-union-government-implementation-right-children-freeand. 123 "Report no. 290: Demands for Grants 2017-18 (Demand No. 57) of the Department of School Education & Literacy), 
Ministry of HRD", Standing Committee on Human Resource 
Development, March 17, 2017, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20HRD/290.pdf. 124 Unstarred question no. 5879, Ministry of Human Resource Development, Lok Sabha, April 10, 2017, http://164.100.47.190/loksabhaquestions/annex/11/AU5879.pdf. 125 Unstarred question no. 237, Ministry of Human Resource Development, Lok Sabha, December 10, 2017, http://164.100.47.190/loksabhaquestions/annex/13/AU237.pdf. 

                                                                                                                                                                                     
 

## Union Budget, 2018-19

2018-19 
% Change (RE 
(2017-18) to BE 
Major Heads 
2016-17 
Actuals 
2017-18 BE 
2017-18 
RE 
BE 
% Change 
RE (2017-
18)/Actuals 
(2016-17) 
(2018-19)) 
 
Department of School Education and Literacy 
42,989 
46,356 
47,006 
9.34% 
50,000 
6.4% 
Scholarships 
84 
602 
602 
616.67% 
556 
-7.7% 
Sarva Shiksha Abhiyan 
21,685 
23,500 
23,500 
8.37% 
26,129 
11.2% 
Autonomous bodies 
6,902 
7,302 
7,952 
15.21% 
7,548 
-5.1% 
Rashtriya Madhyamik Shiksha Abhiyan 
3,698 
3,830 
3,915 
5.87% 
4,213 
7.6% 
Teachers Training and Adult Education 
817 
926 
841 
2.94% 
871 
3.6% 
National Programme of Mid Day Meal in Schools 
9,475 
10,000 
10,000 
5.54% 
10,500 
5.0% 
Others 
328 
197 
197 
-39.94% 
184 
-6.4% 
Department of Higher Education 
29,026 
33,330 
34,862 
20.11% 
35,010 
0.4% 
Higher Education Financing Agency (HEFA) 
 
250 
250 
  
2,750 
1000.0% 
Student Financial Aid 
2,090 
2,380 
2,244 
7.37% 
2,600 
15.9% 
Digital India-e-learning 
452 
497 
518 
14.60% 
456 
-12.0% 
Research and Innovation 
215 
315 
319 
48.37% 
350 
9.7% 
Statutory and regulatory bodies (UGC and AICTE) 
4,952 
5,177 
5,408 
9.21% 
5,208 
-3.7% 
Grants to Central Universities 
6,356 
6,486 
7,261 
14.24% 
6,445 
-11.2% 
Indian Institutes of Technology 
5,380 
7,856 
8,245 
53.25% 
6,326 
-23.3% 
Indian Institutes of Management 
723 
1,030 
1,068 
47.72% 
1,036 
-3.0% 
National Institutes of Technology 
2,860 
3,440 
3,668 
28.25% 
3,203 
-12.7% 
Indian Institute of Science, Education and Research (IISERs) 
1,198 
650 
715 
-40.34% 
689 
-3.6% 
Indian Institutes of Information Technology(IIITs) 
176 
379 
369 
109.66% 
364 
-1.5% 
Rashtriya Uchhatar Shiksha Abhiyan (RUSA) 
1,416 
1,300 
1300 
-8.19% 
1400 
7.7% 
Others 
3,208 
3,819 
3,747 
16.80% 
6,933 
85.0% 
Total 
72,016 
79,686 
81,869 
13.68% 
85,010 
3.8% 

Sources:  Demand for Grants, Ministry of Human Resource Development, Union Budget, 2018-19; PRS. 

## Indicators On School And Higher Education Table 2: State Wise Key Indicators On School Education

Senior 
Elementary 
Secondary 
State/UT 
Private 
schools 
Secondary 
PTR 
GPI 
Government 
schools (%) 
GER 
GER 
(Secondary) 
(%) 
GER 
Andaman & Nicobar Islands 
16.91 
83.1 
98.82 
86.64 
73.96 
15 
0.95 
Andhra Pradesh 
27.55 
71.61 
93.79 
84.28 
- 
19 
1.03 
Arunachal Pradesh 
12.97 
86.29 
90 
81.64 
78.9 
22 
0.97 
Assam 
13.18 
74.63 
85.92 
66.11 
- 
14 
1.18 
Bihar 
5.04 
88.66 
98.23 
73.37 
- 
57 
1.14 
Chandigarh 
39.8 
57.22 
- 
- 
87.09 
14 
1 
Chhattisgarh 
11.87 
87.73 
95.5 
67.14 
95.29 
45 
1.02 
Dadra & Nagar Haveli 
12.68 
86.17 
96.61 
81.82 
88.47 
27 
0.9 
Daman & Diu 
17.93 
82.07 
98.16 
67.38 
59.21 
16 
1.21 
Delhi 
50.86 
49.14 
- 
78.38 
72.53 
28 
1.01 
Goa 
42.47 
57.52 
99.42 
78.62 
84.64 
25 
0.92 
Gujarat 
33.43 
66.56 
96.91 
74.31 
92.64 
34 
0.81 
Haryana 
30.65 
65.61 
93.97 
80.97 
93.66 
17 
0.93 
Himachal Pradesh 
14.7 
85.29 
99.01 
87.43 
89.1 
25 
0.97 
Jammu & Kashmir 
18.07 
81.93 
93.38 
80.08 
86.06 
15 
0.94 
Jharkhand 
5.96 
84.81 
92.24 
74.63 
95.45 
68 
1.05 
Karnataka 
33.17 
66.79 
96.76 
72.89 
95.67 
15 
1.02 
Kerala 
62.29 
27.97 
99.99 
87.09 
99.37 
17 
0.99 
Lakshadweep 
0 
100 
99.2 
85.43 
96.88 
2 
1.13 
Madhya Pradesh 
17.98 
80.9 
91.57 
62.06 
98.25 
36 
0.98 
Maharashtra 
36.62 
62.83 
98.49 
86.3 
97.75 
22 
0.95 
Manipur 
30.77 
66.74 
91.57 
85.1 
- 
13 
0.99 
Meghalaya 
45.11 
53.57 
87.28 
70.29 
- 
13 
1.18 
Mizoram 
32.16 
67.74 
91.31 
69.64 
91.49 
9 
1.01 
Nagaland 
25.65 
74.35 
92.89 
72.74 
87.71 
19 
1.06 
Odisha 
13.55 
83.55 
96.73 
70.34 
- 
23 
0.99 
Puducherry 
41.17 
58.82 
99.56 
84.51 
93.24 
14 
1.01 
Punjab 
25.16 
70.83 
96.76 
88.52 
93.48 
17 
0.99 
Rajasthan 
32.34 
65.44 
94.66 
82.41 
- 
25 
0.83 
Sikkim 
31.97 
68.03 
97.75 
78.59 
85.3 
19 
1.18 
Tamil Nadu 
33.34 
66.35 
- 
91.41 
96.12 
21 
1.04 
Telangana 
30.27 
68.32 
97.84 
84.47 
99.23 
19 
1.07 
Tripura 
6.91 
89.23 
97.62 
51.05 
86.62 
33 
1.01 
Uttar Pradesh 
34.82 
63.54 
92.87 
88.3 
97.14 
41 
0.99 
Uttarakhand 
24.58 
73.88 
96.32 
82.59 
94.77 
17 
0.97 
West Bengal 
10.19 
86.43 
96.47 
77.98 
90.8 
28 
1.19 
All India 
24.88 
72.57 
95.44 
79.91 
98.88 
27 
1.01 

Note: Gross Enrolment Ratio (GER):  GER for a class-group is the ratio of the number of persons in the class-group to the number of persons in the corresponding official age-group; Gender Parity Index (GPI):  It is the ratio of the number of female students enrolled at a certain level of education to the corresponding number of male students at such a level; Pupil-Teacher Ratio (PTR):  It is the number of pupils per teacher. Sources: Educations Statistics at a glance, 2016, Ministry of Human Resource Development, 2016; Flash Statistics, District Information System for Education, 2015-16; PRS. 

| Government        | No. of    |
|-------------------|-----------|
| State             |           |
| Private           |           |
| Colleges          |           |
| GPI               |           |
| Andaman &         |           |
| Nicobar Islands   |           |
| -                 | 7         |
| Andhra Pradesh    | 2,129     |
| Arunachal Pradesh | 6         |
| Assam             | 62        |
| Bihar             | 163       |
| Chandigarh        | 9         |
| Chhattisgarh      | 370       |
| Dadra & Nagar     |           |
| Haveli            |           |
| 4                 | 3         |
| Daman & Diu       | 4         |
| Delhi             | 75        |
| Goa               | 32        |
| Gujarat           | 1,745     |
| Haryana           | 701       |
| Himachal Pradesh  | 153       |
| Jammu and         |           |
| Kashmir           |           |
| 162               | 142       |
| Jharkhand         | 134       |
| Karnataka         | 2,628     |
| Kerala            | 1,001     |
| Lakshadweep       | -         |
| Madhya Pradesh    | 1,411     |
| Maharashtra       | 3,599     |
| Manipur           | 35        |
| Meghalaya         | 28        |
| Mizoram           | 1         |
| Nagaland          | 44        |
| Odisha            | 713       |
| Puducherry        | 50        |
| Punjab            | 762       |
| Rajasthan         | 1,908     |
| Sikkim            | 5         |
| Tamil Nadu        | 2,029     |
| Telangana         | 1,814     |
| Tripura           | 8         |
| Uttar Pradesh     | 5,048     |
| Uttarakhand       | 214       |
| West Bengal       | 632       |
| All India         | 27,679    |

Note: Gross Enrolment Ratio (GER):  GER for a class-group is the ratio of the number of persons in the class-group to the number of persons in the corresponding official age-group; Gender Parity Index (GPI):  It is the ratio of the number of female students enrolled at a certain level of education to the corresponding number of male students at such a level; Pupil-Teacher Ratio (PTR):  It is the number of pupils per teacher. Sources: All India Survey on Higher Education, 2015-16; PRS. 

## Graphical Representation Of The Status Of Education Performance Of States In Class 5 In 'Reading Comprehension' In 2012 And 2015

Sources: National Achievement Survey, 2012 and 2015, National Council of Educational Research and Training; PRS. Note:  1. The National Achievement Survey (NAS) is carried out by National Council of Educational Research and Training every three years to ascertain the learning achievement of students during elementary education in government and government-aided schools. 

2. Arunachal Pradesh, Manipur, Lakshadweep, and Dadra & Nagar Haveli did not participate in NAS, 2012 and NAS, 2015. 

3. The scores range between 0 and 400.  They are scaled for consistency and comparability across states by adjusting for difficulty of tests and ability of 
 
Demand for Grants 2018-19 Analysis Road Transport and Highways India has one of the largest road networks in the world with about 47 lakh km of road length.155 This road length includes National Highways (NHs), Expressways, State Highways (SHs), district roads, PWD roads, and project roads.  In India, road infrastructure is used to transport over 60% of total goods and 85% of total passenger traffic.155 The Ministry of Road Transport and Highways formulates and administers policies for road transport, and transport research.  It is also involved with the construction and maintenance of the National Highways (NHs).  It also deals with matters relating to road transport such as implementation of the primary central legislation, the Motor Vehicles Act, 1988. This note looks at the proposed expenditure of the Ministry for the year 2018-19, its finances over the last few years, and issues with the same.  

## Allocations In Union Budget 2018-19

Expenditure:  The total expenditure on the Ministry of Road Transport and Highways for 2018-19 is estimated at Rs 71,000 crore.156  This is 16% higher than the revised estimates for 2017-18. In 2018-19, while revenue expenditure of the Ministry is expected at Rs 11,560 crore, capital expenditure is expected at Rs 59,440 crore.156  The Ministry has increased its capital expenditure significantly in the last few years.  For 2018-19, the ratio between revenue and capital expenditure is estimated at 16:84.  In comparison, the ratio between revenue and capital expenditure for the years 2015 was at 41:59.   

 
Actual 
2016-17 
Revised 
2017-18 
Budget 
2018-19 
BE 2018-
19/ RE 
2017-18 
Revenue 
11,039 
10,136 
11,560 
14% 
Capital 
41,193 
50,864 
59,440 
17% 
Total 
52,232 
61,000 
71,000 
16% 

Notes: BE - Budget Estimate; RE - Revised Estimate.  
Sources: Notes on Demands for Grants, 2018-2019, Ministry of Road Transport and Highways; PRS.   

## Allocation And Utilisation Of Funds

In the past few years, the actual allocation to the Ministry has been consistently lower than the budget estimates.  However, it has been noted that the utilisation of the funds by the Ministry has been high.  The Standing Committee on Transport, Tourism and Culture (2016) had recommended that the reduction of allocation at the revised estimates stage should be avoided.157   

* The number for 2017-18 compares the budget estimates with 
the revised estimates. 
Sources: Ministry of Road Transport and Highways budget 
documents; PRS.   

## Policy Proposals In The Budget Speech

In his budget speech, the Finance Minister made the following announcements regarding the roads sector: 

 
Road and infrastructure cess:  The existing Road Cess (cess on motor spirit and high speed diesel) has been converted to the Road and Infrastructure Cess. This cess on petrol and high-speed diesel has been increased by Rs 2 per litre, while the excise and customs duty have been cut by the same amount.   
 
Under the Bharatmala Pariyojana about 35,000 km of roads will be developed in Phase-I at an estimated cost of Rs 5,35,000 crore. 
 
To raise equity from the market for its mature road assets, NHAI will consider organizing its road assets into Special Purpose Vehicles and use other innovative monetizing structures like Toll, Operate and Transfer (TOT) and Infrastructure Investment Funds (InvITs). 
 
The government will come out with a policy to introduce toll system on 'pay as you use' basis. 

## Overview Of Finances Expenditure Of The Central Government

In 2018-19, of the total expenditure, the highest 
allocation is towards road works at 58% (Rs 40,881 
crore).156  This is followed by allocation towards 
the National Highways Authority of India (NHAI) 
at 42% (Rs 29,663 crore).156   

## Road Transport And Highways

Major Head 
Actual 
2016-17 
Revised 
2017-18 
Budget 
2018-19 
BE 2018-
19/ RE 
2017-18 
Road works 
44,463 
36,780 
40,881 
11% 
NHAI 
7,500 
23,892 
29,663 
24% 
1,127 
171 
315 
84% 
Road transport and safety Others 
144 
158 
141 
-11% 
Total 
52,232 
61,000 
71,000 
16% 

Notes: BE - Budget Estimate; RE - Revised Estimate. Sources:  Notes on Demands for Grants, 2018-2019, Ministry of Road Transport and Highways; PRS.   
Road works:  Expenditure under road works includes development of NHs, projects related to expressways, increasing the number of lanes under various projects, and development of road connectivity in Naxalite affected areas.  The allocation towards roads works is 11% more than the revised estimates of 2017-18 (Rs 36,780 crore).156  However, the allocation is 8% lower than the actual spending in 2016-17 (Rs 44,463 crore).   
NHAI:  The central government is responsible for the development and maintenance of NHs, and it carries out these functions through the NHAI.  The NHs comprise about 2% of the road network but carry about 40% of the total road traffic.158 Expenditure on the NHAI includes funding provided towards projects under the National Highways Development Project (NHDP).  Key projects under the NHDP include: (i) the Golden Quadrilateral, (ii) the North-South and East-West Corridors, and (iii) four-laning of 12,109 kms under phase III.155  
NHAI has been allocated Rs 29,663 crore in 2018-
19, which is 24% more than the revised estimates for 2017-18 (23,892 crore).156  Of this amount, Rs 20,093 crore (68%) will be provided from the Central Road Fund (CRF), and the remaining Rs 9,570 crore (35%) will be provided from the Permanent Bridge Fees Fund (PBFF).156   

## Funds Managed By The Ministry

The Ministry manages its expenditure through various funds.  Their details are provided below. 

Rs crore) 
 
Actual 
2016-17 
Revised 
2017-18 
Budget 
2018-19 
BE 2018-
19/ RE 
2017-18 
CRF 
34,946 
43,663 
54,014 
24% 
PBFF 
7,572 
8,562 
9,620 
12% 
NIF 
4,465 
5,265 
6,210 
18% 

Notes: BE - Budget Estimate; RE - Revised Estimate. Sources: Notes on Demands for Grants, 2018-2019, Ministry of Road Transport and Highways; PRS.   

Central Road Fund (CRF):  A majority of the 
Ministry's expenditure is managed through 
transfers from the CRF.  A portion of the cess 
collected on motor spirit and high speed diesel is 
earmarked for the development of NHs and SHs, 
and the amount is transferred to the non-lapsable 
CRF.  This amount is eventually released to the 
NHAI, and to the state/UT governments for 
development of road infrastructure in the 
country.159   

For 2018-19, the transfer from CRF is estimated at 
Rs 54,014 crore.1  This is a 24% increase from the 
revised estimates of 2017-18 (Rs 43,663 crore).  
These grants are expected to be used for the 
creation of capital assets. 

Permanent Bridge Fees Fund (PBFF):  Funds 
transferred to the PBFF relate to the revenue 
collected by the government by way of (i) fees 
levied for the use of certain permanent bridges on 
NHs by motor vehicles, (ii) toll on NHs, and (iii) 
revenue share and negative grants received on some 
PPP projects.  The fund is utilised for development 
of NHs being undertaken by the government and 
those entrusted to NHAI.156 

For 2018-19, the transfer to PBFF is estimated at 
Rs 9,620 crore.1  This is a 12% increase from the 
revised estimates of 2017-18 (Rs 8,562 crore).   

National Investment Fund (NIF):  The NIF was 
created in 2005, and is credited with proceeds from 
disinvestments of public sector enterprises.  The 
Ministry finances the Special Accelerated Road 
Development Programme in North East (SARDP-
NE) with funds from the NIF.   

For 2018-19, the transfer to NIF is estimated at Rs 
6,210 crore.1  This is an 18% increase from the 
revised estimates of 2017-18 (Rs 5,265 crore).   

## Schemes

Bharatmala Pariyojana:  The Bharatmala 
Pariyojana is a new umbrella programme covering 
highways.160  It aims to optimize efficiency of 
freight and passenger movement by bridging 
critical infrastructure gaps.  The program aims to 
increase the number districts with national highway 
linkages from 300 to 550.161   

On October 24, 2017, the Union Cabinet approved 
phase I of Bharatmala Pariyojana under which 
34,800 km of roads will be developed over a period 
of five years.  Phase I will also subsume 10,000 km 
of balance roadworks under the NHDP.  The 
estimated cost of Phase I is Rs 5,35,000 crore, 
spread over five years.  Table 4 illustrates the 
various components of Phase I.   

| Components              | Length (in    | Outlay (Rs                |
|-------------------------|---------------|---------------------------|
| km)                     | crore)        |                           |
| 9,000                   | 1,20,000      | Economic corridors        |
| development             |               |                           |
| 6,000                   | 80,000        | Inter-corridor and feeder |
| roads                   |               |                           |
| 5,000                   | 100,000       | National Corridors        |
| Efficiency improvements |               |                           |
| 2,000                   | 25,000        | Border and International  |
| connectivity roads      |               |                           |
| 2,000                   | 20,000        | Coastal and port          |
| connectivity roads      |               |                           |
| Expressways             | 800           | 40,000                    |
| Total                   | 24,800        | 3,85,000                  |
| 10,000                  | 1,50,000      | Balance road works        |
| under NHDP              |               |                           |
| Total                   |               | 5,35,000                  |

Sources: Ministry of Road Transport and Highways; PRS.  

## Issues To Consider

The roads sector is facing several constraints such as: (i) availability of land for NH expansion and upgradation, (ii) significant increase in land acquisition cost, (iii) lack of equity with developers, (iv) bottlenecks and checkpoints on NHs which could adversely impact benefits of GST, (v) higher cost of financing; and (vi) shortfall in funds for maintenance.162  Further, the value of NPAs in the infrastructure sector (including roads and highways) has been increasing, with NPAs at around Rs 2.6 lakh crore as of August 2016.163  We discuss some of these issues below.  

## Targets Vs Performance

Road construction:  The achievement of construction targets (for NHs) has ranged between 55% to 70% in the last three years.  The road construction target for 2017-18 was 15,000 km, of which 4,292 km has been constructed till November 30, 2017 (33%).164  This suggests a rate of construction of 20 km/day (see Table 6).  This is slightly lower than the rate of construction for last year which was 22 km/day.  Given that 33% of the target length has been constructed in the first eight months of the year, it remains to be seen how much of the target will be completed in the remaining four months.   

| Achievement    | Achievement    | Year    | Target    |
|----------------|----------------|---------|-----------|
| (km)           | (km)           | (in %)  |           |
| 2014-15        | 6,300          | 4,410   | 70%       |
| 2015-16        | 10,950         | 6,061   | 55%       |
| 2016-17        | 15,000         | 8,231   | 55%       |
| 2017-18        | 15,000         | 4,942*  | 33%*      |

* data as of November 30, 2017. Sources: Rajya Sabha questions; PRS.  

The CAG had noted that between 2009-10 to 2012-
13, the rate of NH construction was between 3.06 
km/day and 17.81 km/day, as compared to a target 
of 20 km/day.165   

The Standing Committee on Transport (2017) had 
noted that none of the schemes or targets could not 
be met due to shortage of funds.  The projects 
could not be completed due to various reasons such 
as delays in obtaining clearances, poor financial 
and technical performance of the contractors, and 
law and order issues.   

## Project Delays

The Committee on Public Undertakings (2017) had 
noted that from 1995, till June 2016, out of the total 
388 projects completed, only 55 projects were 
completed on or before time.166  Delays in the 
completion of the projects were mainly attributed 
to: (i) the long time taken in land acquisition, and 
obtaining environment and forest clearances, (ii) 
poor performance of concessionaires due to 
economic slowdown, and (iii) law and order issues.   

The CAG had noted that several road projects get 
stalled due to court injunctions.167  As on July 31, 
2017, 30 road projects with a total cost of Rs 
11,216 crore were stayed for three years.  Such 
delays increase project costs, eventually making 
certain projects unviable.   

Table 7 below shows the time taken to obtain 
various types of clearances.   

Clearance required 
Statutory Authority 
Time taken 
Environmental 
Ministry of Environment and Forest 
12-15 months 1-2 years 
Forest 
Ministry of Environment and Forest 
Wildlife 
National Board of Wildlife and Supreme Court of India 
More than 3 years 

Sources: Outcome Budget 2015-16, Ministry of Road Transport and Highways; PRS.   

The Standing Committee on Transport (2015) had 
recommended that a coordination mechanism at the 
central level with the Ministries of Finance, 
Environment and Forest and Defence will help 
speed up the process of clearances.170  The 
Standing Committee (2016) had also suggested that 
the Ministry of Road Transport and Highways 
should obtain all these clearances before awarding 
the projects to concessionaires.  The NHAI should: 
(i) technically examine, (ii) estimate costs, and (iii) 
ensure all clearances before awarding any projects 
to the concessionaires. 

## Increase In Land Acquisition Costs

From January 1, 2015, the compensation for land 
acquired by NHAI is determined as per the Right to 
Fair Compensation and Transparency in Land 
Acquisition Rehabilitation and Resettlement Act, 

2013.  The Committee on Public Undertakings 
(2017) had noted that due to higher compensation under the 2013 Act, the expenditure by the Ministry of Road Transport on land acquisition increased from Rs 9,097 crore in 2014-15 to Rs 
21,933 crore in 2015-16.166   
The Committee also observed that farmers who were entitled to lesser compensation under the older law, have been approaching courts for increased compensation.166  This has further delayed the land acquisition process and added to the cost of projects.   

## Performance Of Nhai

The Comptroller and Auditor General of India (2016) had also noted several procedural inefficiencies with NHAI.  For example, NHAI could not realise toll on certain projects due to delays in approvals, toll operations, and other procedural lapses.168  NHAI did not adhere to Ministry of Road Transport and Highways guidelines regarding maintenance of project wise balance sheet and cash flow.168  Loss of revenue was also noted due to inefficient bidding process for engagement of toll collecting agencies.168 The Committee on Public Undertakings (2017) had also noted several issues in the financial performance of NHAI such as: (i) insufficiency of funds, (ii) gap between the amount of fund allocated and released, and (iii) under-utilisation of funds.166  For example, funds that are left unspent at the end of a financial year is shown as 'opening balance' at the beginning of the next financial year.  
This opening balance was Rs 2,672 crore and Rs 6,740 crore for the years 2015-16 and 2016-17 respectively.166  This shows NHAI's inability to optimally utilise the available funds.  

## Issues With Financing

Role of central government in financing:  The Standing Committee on Transport (2016) had observed that while the Ministry of Road Transport and Highways invests in the construction of roads, it does not have its own source of revenue other than budgetary support from the central government.169  The Committee recommended that the RBI and Ministry of Finance may help the Ministry of Road Transport to set up its own dedicated financial institutions to generate funds for development of the road sector.  It also recommended that Ministry of Road Transport should monitor toll collection and channelise the surplus money towards stressed projects. The Standing Committee (2016) had also noted that while the central government has allocated a huge budget for the road sector, this cannot sustain over a long term.169  It suggested that the government should devise ways and establish appropriate financial institutions and models to encourage the return of private investment to the road sector.   

Private financing and contracts:  It has been 
noted that the roads sector is struggling with regard 
to private financing.158,170  Several PPP projects 
have not been able to attract bids.170  The major 
highway developers in the country are also facing 
financial capacity constraints.  Further, the lack of 
debt products that are aligned with the revenue 
stream profile of highway projects, makes 
financing of such projects difficult.  These reasons 
have resulted in some projects getting stalled at the 
construction stage, and this is also discouraging 
prospective bidders.170   

The Committee on Revisiting & Revitalizing the 
PPP model of Infrastructure Development (Chair: 
Dr. Vijay Kelkar) had looked at issues with PPP 
projects in India, in November 2015.171  It had 
recommended setting up an independent regulator 
for the roads sector.  It had also noted that service 
delivery to citizens is the government's 
responsibility and PPPs should not be used to evade 
such responsibilities.  

The Kelkar Committee had noted that inefficient 
and inequitable allocation of risk can be a major 
factor leading to failure of PPPs.171  PPP contracts 
should ensure optimal risk allocation across all 
stakeholders.  The basic principle for risk allocation 
should be to ensure that the entity that is best suited 
to manage a risk should be allocated that risk. 

The Kelkar Committee had also observed that since 
infrastructure projects span over 20-30 years, a 
private developer may lose bargaining power 
because of abrupt changes in the economic or 
policy environment.171  It recommended that the 
private sector must be protected against such loss 
of bargaining power.  This could be ensured by 
amending the terms of the concession agreement to 
allow for renegotiations.   

In January 2016, the Cabinet Committee on 
Economic Affairs had approved the hybrid annuity 
model for implementing highway projects in 
partnership with the private sector.172  Under this 
model, government and the private entity will share 
the project cost in the ratio of 40:60.  This model is 
expected to lower the initial capital outflow for the 
government, as bulk of the payment will be done 
through annuity payments.  Further, the private 
entity will be insulated from traffic and inflation 
risks, as these will be looked after by the 
government.   

Infrastructure lending:  The Standing Committee 
on Transport (2016) had observed that several of 
the long-term loans disbursed for the road sector 
are turning into non-performing assets (NPAs).169  
Project bids are often made without proper study, 
and projects are awarded in a hurry.  This results in 
stalling of projects, and concessionaires leave mid-

way.  Concessionaires had also anticipated higher revenue realization but achieved less due to the recent economic downturn.169 Banks and other infrastructure lending institutions have also been reluctant to finance the highways sector.169  This has led to difficulties in debt servicing, putting additional stress on the road infrastructure portfolios.  Besides increasing the cost of the project, delays also make it difficult to obtain additional debt.169 The Committee recommended that banks should take due diligence while disbursing loans to concessionaires.  It also suggested that the bank NPAs may be supported by government allocation. Further, banks could be empowered to recover the bad debts.  The model concession agreement of NHAI should be restructured to change terms and conditions which ensure that banks do not end up accumulating NPAs.   

## Investment In Maintenance Of Roads

In 2018-19 the Ministry has allocated Rs 3,071 crore towards maintenance of roads and highways (including toll bridges).  This is Rs 37 crore lower than the revised estimates of 2017-18. The Ministry allocates about 4% of its budget towards maintenance of NHs.  This is for a total NH length of 1.15 lakh km.  In comparison, in 2014-15 the US government allocated about 48% of its total budget ($19.2 billion) on roads and highways towards the maintenance of existing facilities.173  This was for a total highway length of 10.16 lakh miles (or 16.37 lakh km) (highways that receive federal aid).174 The National Transport Development Policy Committee (2014) had observed that as compared to the amount spent on construction and upgradation of roads, the amount spent on maintenance of existing roads is less.175  This results in roads with potholes, weak bridges, poor pavements, etc.  Further, maintenance is carried out when required, as opposed to being a part of preventive measures.175 The Standing Committee on Transport (2017) had also raised concerns regarding the allocation towards maintenance of highways.  The entire length of NHs in the country cannot be maintained with such an amount.  It had recommended that the budget for maintenance of NHs should be increased.  Maintenance of roads should be given top priority as it increases the life span of roads. An effective monitoring mechanism for repair and maintenance of roads should be put in place.170 Further, there should be penalties for contractors and engineers in case of poor quality repair, maintenance, and construction.   

## Investment In Road Safety

In 2018-19, the Ministry has allocated Rs 315 crore 
towards road transport and safety.  This would 
provide for various things such as road safety 
programmes, setting up of facilities on National 
Highways for extending relief to accident victims, 
creation of National Road Safety Board, 
strengthening of public transport, research and 
development, and training.   

This amount is about 0.4% of the Ministry's total 
budget.  In comparison, the US federal government 
spends about 20% of its total expenditure on roads 
and highways (around $7.8 billion) towards safety 
on highways.173   

Between 2005 and 2015, the road network in India 
grew by 44%.176  During the same period, the 
number of road accidents increased by 14%, and 
road accident fatalities increased by 54%.177  In 
2016, there were 4,80,652 road accidents in India, 
which killed about 1.5 lakh people and injured 
about five lakh people.178   As a signatory to the 
Brasilia Convention, the government intends to 
reduce traffic fatalities by 50% by 2020.179   

The Motor Vehicles (Amendment) Bill, 2016, that 
was passed in Lok Sabha in April 2017 (currently 
pending in Rajya Sabha), seeks to amend the Motor 
Vehicles Act, 1988 to address various issues 
around road safety.  The Bill provides for a Motor 
Vehicle Accident Fund which would be used for 
treatment of injured persons.  It also provides for 
cashless treatment for road accident victims, and a 
golden hour scheme for immediate treatment of 
accident victims.  It also provides for a National 
Road Safety Board.  The Board will provide advice 
to the central and state governments on all aspects 
of road safety and traffic management.   

## Connectivity In Remote Areas

Funds are also allocated towards the development 
of highways in areas with poor connectivity.  Some 
of these projects include Special Accelerated Road 
Development Programme in North East (SARDP-
NE), Externally Aided Projects (EAP) and Roads 
Projects in Left Wing Extremism Affected Areas 
(LWE).  In 2017, the government announced 
implementing 48,877 km of projects under these 
ongoing schemes between 2017 and 2022.  These 
projects will have an outlay of Rs 1,57,324 crore.180 

In Budget 2018-19, Rs 6,210 crore has been 
allocated towards the SARDP-NE project, which is 
18% higher than last year's revised estimates.  
With regard to projects in LWE areas, the Standing 
Committee on Transport had noted that the 
allocation had decreased by 24% in 2016-17 
(revised estimates as compared to budget 
estimates).  It had raised concerns that such budget 
cuts should be avoided as road connectivity in such 
areas is significant.   

## 

155 Annual Report 2013-14, Ministry of Road Transport and Highways. 156 Notes on Demands for Grants 2018-19, Demand no 81, Ministry of Road Transport and Highways, http://www.indiabudget.gov.in/ub2018-19/eb/sbe81.pdf. 157 "234th Report: Demands for Grants (2016-17) of Ministry of Road Transport and Highways", Standing Committee on Transport, Tourism and Culture, May 2016-17, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20Transport,%20Tourism%20and%20Culture /234.pdf. 158 Outcome Budget 2015-16, Ministry of Road Transport and Highways. 159 Notes on Demand for Grants 2014-15, Demand no 83, Ministry of Road Transport and Highways. 160 Bharatmala Pariyojana Phase I, Press Information Bureau, Ministry of Road Transport and Highways, October 25, 2017 http://pibphoto.nic.in/documents/rlink/2017/oct/p2017102504.p df. 161 Unstarred question no. 1129, Lok Sabha, December 21, 2017,.http://164.100.47.194/Loksabha/Questions/QResult15.asp x?qref=59211&lsno=16. 162 Chapter 8: Industry and Infrastructure, Economic Survey 2016-17, Volume 2, August 2017, http://www.indiabudget.gov.in/es2016-17/echapter_vol2.pdf. 163 "246th Report: Demands for Grants (2017-18) of Ministry of Road Transport and Highways", Standing Committee on Transport, Tourism and Culture, March 17, 2017, http://164.100.47.5/newcommittee/reports/EnglishCommittees/C ommittee%20on%20Transport,%20Tourism%20and%20Culture /246.pdf. 164 Unstarred Question No 243, Rajya Sabha, Ministry of Road Transport and Highways, Answered on December 18, 2017. 165 Report No 36 of 2014, Performance Audit of Implementation of Public Private Partnership Projects in National Highways Authority of India, Comptroller and Auditor General of India, December 23, 2014, http://www.cag.gov.in/sites/default/files/audit_report_files/Unio n_Performance_Commercial_PPP_Projects_Ministry_Road_Tra nsport_Highways_36_2014.pdf. 166 Report No. 19, Committee on Public Undertaking: 'National Highways Authority of India', Lok Sabha, August 2, 2017, http://164.100.47.193/lsscommittee/Public%20Undertakings/16
_Public_Undertakings_19.pdf. 167 Chapter 9: Ease of Doing Business' Next Frontier: Timely Justice, Economic Survey 2017-18, http://mofapp.nic.in:8080/economicsurvey/pdf/131- 144_Chapter_09_ENGLISH_Vol%2001_2017-18.pdf. 168 Chapter 12: Ministry of Road Transport and Highways, Report No. 9 of 2017, 2016, Compliance Audit Union Government Commercial, Comptroller and Auditor General of 

India, April 5, 2017, 
http://www.cag.gov.in/sites/default/files/audit_report_files/Exec
utive_Summary_report_No_9_%20of_2017_on_compliance_au
dit_observations_union_government.pdf.  

169 "236th Report: Infrastructure Lending in Road Sector", 
Standing Committee on Transport, Tourism and Culture, August 
10, 2016, 
http://164.100.47.5/newcommittee/reports/EnglishCommittees/C
ommittee%20on%20Transport,%20Tourism%20and%20Culture
/236.pdf.  

170 "220th Report: Demands for Grants (2015-16) of Ministry of 
Road Transport and Highways", Standing Committee on 
Transport, Tourism and Culture, April 28, 2015.   

171 "Report of the Committee on Revisiting and Revitalising 
Public Private Partnership Model of Infrastructure", Department 
of Economic Affairs, Ministry of Finance, November 2015. 172 "Hybrid annuity model for implementing highway projects", 
Press Information Bureau, Ministry of Road Transport & 
Highways, January 27, 2016.  

173 FHWA FY 2016 Budget, Federal Highway Administration, 
https://cms.dot.gov/sites/dot.gov/files/docs/FY2016-
BudgetEstimate-FHWA.pdf.  

174 Public Road Length - 2014, Miles by Ownership and 
Federal-Aid Highways, Federal Highway Information, US 
Department of Transportation, October 2015, 
https://www.fhwa.dot.gov/policyinformation/statistics/2014/pdf/
hm16.pdf.  

175 "Volume 3, Chapter 2, Roads and Road Transport", India 
Transport Report: Moving India to 2032, National Transport 
Development Policy Committee, June 17, 2014, 
http://planningcommission.nic.in/sectors/NTDPC/volume3_p1/r
oads_v3_p1.pdf.  

176.  Basic Road Statistics 2014-15, Ministry of Road Transport 
and Highways http://morth.nic.in/showfile.asp?lid=2445.  

177.  Road Accidents in India 2015, Ministry of Road Transport 
and Highways, May 2015, 
http://morth.nic.in/showfile.asp?lid=2143.  

178 Road Accidents in India 2016, Transport Research Wing, 
Ministry of Road Transport and Highways, 
http://morth.nic.in/showfile.asp?lid=2904.  

179 "Consultative Committee of the Ministry of Road Transport 
& Highways discusses functioning of NHIDCL and Road 
Safety", Press Information Bureau, Ministry of Road Transport 
and Highways, March 22, 2016.   

180 "Investment on Highways", Press Information Bureau, 
Ministry of Road Transport & Highways, February 5, 2018, 
http://pib.nic.in/newsite/PrintRelease.aspx?relid=176197.  

## Demand For Grants 2018-19 Analysis Agriculture And Farmers' Welfare

The Ministry of Agriculture and Farmers' Welfare is divided into three departments: (i) Agriculture, Cooperation and Farmers Welfare, which implements programmes and schemes relating to crop husbandry, and manages agriculture inputs, (ii) Agricultural Research and Education, which manages agriculture universities, and promotes research in the sector and (iii) Animal Husbandry, Dairying and Fisheries, which manages the production and development of livestock, dairy and fisheries.  This note analyses issues in the agriculture sector, expenditure trends and budget proposals of these Departments. 

Allocation to the Ministry in 2018-19 
The Ministry has been allocated Rs 57,600 crore in 2018-19.181  This is 14.6% more than the revised estimate in 2017-18 as shown in Figure 20. Agriculture is a state subject and the Union Budget allocation under the Ministry is largely focused on subsidies and transfers to states for centrally sponsored schemes. Note that, in 2016-17, the allocation under the Ministry increases suddenly due to the Interest Subsidy Scheme.  The scheme which is being accounted under the Ministry of Agriculture from 2016-17, was under the Ministry of Finance earlier. 

Note: Data for 2018-19 is budgeted estimate, and data for 2017- 18 is revised estimate.  Rest are actual expenditure. Source:  Union Budget documents between 2013-14 and 2018- 19; PRS. 

Budgeted vs actual expenditure:  In 2017-18, the allocation was revised down by 1.5% as shown in Figure 21.  Between 2009-10 and 2015-16, the actual expenditure was less than the budgeted expenditure, except for years 2010-11 and 2016-17. The Standing Committee on Agriculture (2016) has observed that reducing allocations at the later stages may be a result of slow spending in the first two quarters of the financial year.182   

Note: Data for 2017-18 is as per the revised estimate.  Rest are 
actual expenditure. 
Source:  Union Budget documents between 2010-11 and 2018-
19; PRS. 

## Departmental Expenditure

Expenditure across departments in 2018-19 is given in Table 38.   

## Crore)

| RE            | BE      | %       |
|---------------|---------|---------|
| Department    |         |         |
| AE            |         |         |
| 2016-17       | 2017-18 | 2018-19 |
| Agriculture & |         |         |
| Co-operation  |         |         |
| 36,912        | 41,105  | 46,700  |
| 5,729         | 6,992   | 7,800   |
| Agricultural  |         |         |
| Research and  |         |         |
| Education     |         |         |
| 1,858         | 2,167   | 3,100   |
| Animal        |         |         |
| Husbandry,    |         |         |
| Dairying and  |         |         |
| Fisheries     |         |         |
| Total         | 44,500  | 50,264  |

Note: AE: Actual expenditure; RE: Revised estimate; BE: Budgeted estimate. Sources: Expenditure Budget, Union Budget 2018-19; PRS.   

 
The Department of Agriculture, Co-operation and Farmers Welfare accounts for 81% of the Ministry's allocation, in 2018-19.181  The Department is allocated Rs 46,700 crore, an increase of 13.6% (Rs 5,595 crore) over the revised estimate of 2017-18.183   
 
About 82% of this allocation is proposed to be spent on five schemes.  These are the Interest Subsidy Scheme (32%), Pradhan Mantri Fasal Bima Yojana (28%), Pradhan Mantri Krishi Sinchayi Yojana (9%), Rashtriya Krishi Vikas 

Yojana (8%), and National Mission of 
Horticulture (5%).  Table 41 of the Annexure 
provides details on expenditure on major heads 
under the Department. 

 
In 2018-19, the Department of Agricultural 
Research and Education is allocated Rs 7,800 crore.184  This is an increase of 11.6% (Rs 808 crore) over the revised estimates of 2017-18.184 This is due to increase in provisions for research under crop sciences (77%), and animal sciences (47%).  Expenditure under the Indian Council of Agricultural Research (ICAR) accounts for 59% of the expenditure under the Department.184  Table 42 of the Annexure provides details on expenditure on major heads under the Department. 
 
The Department of Animal Husbandry, Dairying and Fisheries accounts for 5% (Rs 3,100 crore) of the allocation under the Ministry in 2018-19.  This is an increase of 43.1% (Rs 933 crore) over the revised estimate of 2016-17.185  This is due to increase in the allocation for schemes such as the Livestock Health and Disease Control (70%), and Integrated Development and Management of Fisheries (110%).  Table 43 of the Annexure provides details on expenditure on major heads under the Department. 

## Analysis Growth In The Agriculture Sector

The contribution of agriculture and allied sectors in the economy declined from 18.2% in 2012-13 to 16.4 % in 2017-18.186  Further, the growth in the agriculture sector has been volatile over the past few years as shown in Figure 22.  In 2017-18, the growth rate of the agriculture sector is estimated to be 2.1%, as compared to 4.9% in 2016-17.186   
Sources: Economic Survey 2018; PRS. 

Composition of agriculture growth:  Within the agriculture sector, the share of the crop sector declined from 65% in 2011-12 to 60% in 2015- 16.186  On the other hand, the contribution of the livestock and fisheries sectors has been increasing as shown in Figure 23.212  For instance, the share of livestock sector increased from 22.6% in 2013-14 to 25.7% in 2015-16.187   
 
Source: Central Statistics Office 2018; PRS. 

In 2017-18, the agriculture growth rate was 
targeted at 4% under the Rashtriya Krishi Vikas 
Yojana (RKVY).  Under the scheme, financial 
assistance is provided to states to implement sub-
schemes such as production growth, infrastructure 
and assets, Crop Diversification Program and 
Bringing Green Revolution to Eastern India, and 
innovation and agri-entrepreneur 
development.188,189 

In 2018-19, Rs 3,600 crore has been allocated to 
this scheme, an 18% increase over the revised 
estimate in 2017-18.183 

Underutilisation of funds:  In 2017-18, the 
expenditure under the scheme has been revised 
down by 36%.  The Standing Committee on 
Agriculture (2017) observed that funds under the 
scheme reduced drastically and continuously 
between 2012 and 2017.190  For instance, out of 
around Rs 5,400 crore allocated in 2016-17, Rs 
3,892 crore were released.  This is shortfall of 
around 28% as shown in Figure 24.191  Further, out 
of this released amount, only around Rs 3,400 crore 
was utilised.  This is a further shortfall of 24.5%.  

 
Source:  Rajya Sabha Unstarred Question No 31, February 2, 2018; PRS. 

State agriculture plans:  Under the scheme, district and state agriculture plans must be prepared for 

## 

development of various aspects under agriculture.190  The Standing Committee on Agriculture (2017) noted that only 12 states have prepared state agriculture plans as of February 2017.  Further, only 38% of the district agriculture plans have been prepared.190  The Committee recommended that such plans need to prepared and approved without delay to avoid reduction of funds at later stages. 

## Agriculture Credit

Agriculture credit is provided to farmers under the Interest Subsidy Scheme under the Ministry.192 Under the scheme, interest subvention of 2% will be provided to farmers on short term crop loans up to Rs three lakh.  Further, an additional interest subvention of 3% is provided to farmers repaying the loan on time (maximum one year). In 2018-19, the interest subsidy scheme has been allocated Rs 15,000 crore, accounting for 32% of the estimated expenditure of the Department.183 Issues related to the scheme are: 
Inadequate allocation for unsettled claims:  The Standing Committee on Agriculture (2017) noted that budget allocation under the scheme has been inadequate.193  It observed that, in 2017-18, against an estimated requirement of Rs 41,748 crore for unsettled claims, only Rs 15,000 crore was allocated.  Note that this is further revised down by 1.7% to Rs 14,750 crore.  This is following a shortfall of 10.7% in 2016-17.   
Short-term vs long term loans:  In 2015, the Committee on Medium-Term Path on Financial Inclusion under the Reserve Bank of India (RBI) observed that as the scheme is for short-term crop loans, it discriminates against long-term loans.194 Short term crop loans are used for pre-harvest activities such as weeding, harvesting, sorting and transporting.  Long-term loans are taken to invest in agricultural machinery and equipment, or irrigation.  Hence, the Committee stated that the scheme does not incentivise long-term capital formation in agriculture, which is essential to boost productivity in the sector. Over the past few decades, the trend of short term and long term agricultural credit in the country has reversed.  From 1990-91 to 2010-11, the share of long term credit decreased from about 66% to 42% (see Figure 26).195,196  This implies that farmers are taking loans for recurring expenditures rather than to fund long term investments. 

 
Minimum Support Prices (MSPs) 
MSPs are the prices at which the central 
government purchases agriculture commodities 
from farmers.   
The Finance Minister in the budget speech 
announced that MSPs for certain Rabi and Kharif 
crops will be provided at least at one and a half 
times the production cost.197  This production cost, 
A2+FL, includes costs of inputs such as seeds, 
fertiliser, and implied cost of family labour.   

While MSPs are announced for 23 crops every 
year, public procurement is limited to a few such as 
paddy, wheat and, to a limited extent, pulses.198  
The procurement is also largely from a few states.  
Three states (Punjab, Haryana, and Madhya 
Pradesh) which produce 49% of the national wheat 
output account for 93% of procurement.  For 
paddy, six states (including Punjab, Chhattisgarh 
and Andhra Pradesh) with 40% production share 
have 77% share of the procurement.   
Figure 25: Share of crop produce procured in 
2016-17 

Other issues with the implementation of the MSP 
regime include (i) low awareness among farmers 
before the sowing season (according to NITI 
Aayog, 62% of the farmers were informed of MSPs 
after the sowing season), (ii) long distances to the 
procurement centres, (iii) increasing cost of 
transportation for farmers, and (iv) inadequate 
storage capacity.199   
The NITI Aayog noted that the agricultural pricing 
policy needs to be reviewed to ensure that farmers 
are receiving remunerative prices for their produce.  
Farmers are often forced to engage in distress sales, 
i.e., selling below the MSPs.  One of the measures 
it recommends to assure remunerative prices is a 
price deficiency system.199  Under such a system, 
farmers would be compensated for certain 
commodities if their prices fall under a specified 
threshold.  This would reduce stock-holding by 
farmers who store commodities until prices 
increase, and also incentivise farmers to produce 
different crops.  Farmers would be paid by using 
the direct benefit transfer system, through bank 
accounts linked to the their Aadhaar numbers.   

Source:  Handbook of Statistics on Indian Economy 2017, Reserve Bank of India; PRS. 

An Internal Working Group under the RBI observed that the Interest Subsidy Scheme has distorted the agricultural credit system.200  Further, it stated the scheme led to banks granting loans under the scheme without establishing that the loans are for agriculture, and claiming interest subvention as well as priority sector benefit. 

Small and marginal farmers:  The RBI Committee observed that the owner of the land is often not the cultivator even in the case of small and marginal holdings.  For example, a landowner may get the benefit of subsidised credit at times, and may be the moneylender to his cultivator.194 Farmers with land holdings of less than a hectare primarily borrow from informal sources of credit such as moneylenders (41%), whereas those with land holdings of two or more hectares primarily borrow from banks (60% or more) as shown in Figure 27.194  Informal sources of credit are typically offered at higher rates of interests, and may not have proper documentation.   
Source:  Report on Medium-Term Path Financial Inclusion, Reserve Bank of India, 2015; PRS. 

The Committee recommended that agricultural credit must flow to the actual cultivator for which substantial reform is necessary.194  Further it stated that the subsidised credit increases the probability of misuse.  The Committee on Comprehensive Financial Services for Small Businesses and Low- Income Households has also suggested the benefits must be transferred farmers directly and instead of subvention and waivers.201 

Land reforms:  Considering that access to 
agricultural credit is linked to formal land titles, the 
RBI Committee recommended that credit eligibility 
certificates, which would act as tenancy/lease 
certificates should be issued to tenant farmers.194  
These certificates would also enable landless tenant 
cultivators to obtain agricultural credit.   

## Crop Insurance

Crop insurance is provided to farmers under the 
Pradhan Mantri Fasal Bima Yojana (PMFBY).202  
The scheme covers all farmers, including tenant 
farmers and sharecroppers, who are growing 
notified crops in notified areas.203  In 2018-19, the 
scheme has been allocated Rs 13,000 crore, a 22% 
increase over its revised estimate in 2017-18.183  It 
accounts for 28% of the expenditure under the 
Department.  Issues related crop insurance have 
been raised by expert committees include: 

Awareness about crop insurance:  The Economic 
Survey 2018 noted that the share of agricultural 
households insuring their crops was low.186  Less 
than 5% of the agricultural households cultivating 
major crops such as rice and wheat insured 
crops.186  Lack of awareness among farmers about 
crop insurance was the major factor for not insuring 
their crops.186  Further, lack of awareness about 
availability of crop insurance was the other 
prominent reason.   

The Standing Committee on Finance (2016) has 
recommended that the government should create 
awareness about what crops should be grown based 
on factors such as the quality of soil and incidence 
of rainfall in different regions.204  

Coverage of insurance schemes:  It is targeted to 
provide crop insurance coverage to 30%, 40% and 
50% of total cropped area in the country during 
2016-17, 2017-18, and 2018-19 respectively.193   

As per the Agricultural Statistics at a Glance 2016, 
out of the 2,009 lakh hectares of area sown in 
2013-14, 427 lakh hectares (21%) of area was 
insured.206  As per the Economic Survey 2018, in 
2016-17, 554 lakh hectares of land was insured 
meeting the 30% target in 2016-17.186  This implies 
that the total cropped area in 2016-17 was lower as 
compared to 2013-14, resulting in meeting the 
target of 30%. 

Coverage of farmers:  In 2016-17, 571 lakh 
farmers were insured under the scheme.186  Note 
that PMFBY is mandatory for farmers with loans 
and optional for those without loans similar to 
previous crop insurance schemes such as National 
Agricultural Insurance Scheme.202  Majority (76%) 
of the farmers insured had loans.  Further, coverage 
of farmers without loans is low in most states 
where six states (such as Maharashtra and 

 
Karnataka) account for 95% of the farmers without loans insured. The Comptroller and Auditor General of India observed that coverage of farmers without loans was low under previous crop insurance schemes.  It recommended that the Department should ensure coverage of more farmers including farmers without loans.205  
Assessment of losses:  The Standing Committee on Agriculture (2017) observed that the state governments are not readily accepting and adopting use of technology for assessing yield loss.193  It also observed that crop cutting experiments are not being carried out diligently.  The Committee recommended that the Ministry to should pursue state governments to adopt technology aids and satellite imagery for crop cutting experiments.   
Timely settlement of claims:  Claims under the insurance scheme must be settled within two months from the crop harvest.193  The Standing Committee on Agriculture recommended that an institutional mechanism must be put in place to monitor faster settlement of pending claims.193  

## Irrigation

As of 2013-14, about 48% of the net sown area was under irrigation.  This implies that the remaining area depends on rainfall.206  Major sources of irrigation include wells (including tube-wells) (64%), and canals (26%) as shown in Figure 28.207   
Further, area under irrigation consumes about 84% of the total available water in the country.208 Sources such as canals and tube-wells use the technique of flood irrigation, where water is allowed flow in the field and seep into the soil.209 This results in the wastage of water since excess water seeps into the soil or flows off the surface without being utilised.  It has been recommended that farmers should move from flood irrigation to the drip or sprinkler irrigation systems (micro irrigation) to conserve water.210 The Pradhan Mantri Krishi Sinchai Yojana was launched in 2015 to increase the coverage of irrigated area.211  The Department implements the 
'Per Drop More Crop' component under the scheme to increase water efficiency through micro 

irrigation and other interventions.  In 2018-19, the 
Department has been allocated Rs 4,000 crore for 
the scheme, a 33% increase over the revised 
estimates of 2017-18.183   

Shortfall in funds:  Budgeted allocation under the 
scheme has been increasing over the years.190  
However, the allocation is revised down at later 
stages as shown in Table 39.  For example, in 
2017-18, allocation under the scheme was revised 
down by 12% from Rs 3,400 crore to Rs 3,000 
crore. 

PMKSY under the Ministry 
|         | Budgeted    | Actual/Revised    | % shortfall    |
|---------|-------------|-------------------|----------------|
| 2015-16 | 1,800       | 1,556             | -14%           |
| 2016-17 | 2,340       | 1,991             | -15%           |
| 2017-18 | 3,400       | 3,000             | -12%           |
| 2018-19 | 4,000       |                   |                |

Note: Data for 2017-18 is a revised estimate. Source: Union Budgets 2015-19; PRS. 

Physical progress:  In 2017-18, it is targeted that 
12 lakh hectares of land will be brought under 
micro-irrigation.  In 2016-17, 8.4 lakh hectares was 
brought under micro-irrigation, followed by 5.7 
lakh hectares in 2015-16.   

## Horticulture

Between 2001-02 and 2016-17, production of 
horticulture crops increased from 145 million 
tonnes to 295 million tonnes as shown in Figure 
29.212  This implies that the horticulture production 
grew at an average growth rate of 4.8%.  In 
comparison, production of foodgrains grew at 1.7% 
during the same period.   

## Production (Million Tonnes)

In 2013-14, fruits and vegetables contributed to 
23% of the total value of agriculture crops while 
other horticulture crops contributed to a further 7%.  
The National Mission on Horticulture seeks to 
promote the horticulture sector by providing 
availability of quality inputs such a planting 
material, and post-harvest interventions such as 

access to market.183  Note that the Mission also includes provisions for Coconut Development Board, Horticulture Development Board and Development of Commercial Horticulture through production and post-harvest management, capital investment subsidy for construction, expansion, modernisation of cold storages.183 
Expenditure:  In 2018-19, the scheme has been allocated Rs 2,536 crore.183  This is 15.8% more than the revised estimate in 2017-18.183  Over the past few years, the actual expenditure under horticulture has been lower than the budgeted allocation (except 2013-14) as shown in Table 40.190   

horticulture under the Department 
| Year    | Budgeted    | Actual    | % shortfall    |
|---------|-------------|-----------|----------------|
| 2012-13 | 2,212       | 1,860     | -15.9%         |
| 2013-14 | 2,556       | 2,857     | 11.8%          |
| 2014-15 | 2,263       | 1,959     | -13.4%         |
| 2015-16 | 2,000       | 1,699     | -15.0%         |
| 2016-17 | 1,620       | 1,496     | -7.7%          |
| 2017-18 | 2,320       | 2,190     | -5.6%          |
| 2018-19 | 2,536       | -         | -              |

Note: 'Actual' amount for 2017-18 is a revised estimate. Source: Horticulture Statistics at a Glance 2017, Union Budget 2018-19; PRS. 

## Agricultural Marketing

The Integrated Scheme on Agriculture Marketing includes sub-schemes such as: (i) agriculture marketing infrastructure, to create storage capacity and farmer consumer markets, (ii) a market research and information network, (iii) strengthening Agmark grading facilities, (iv) agrobusiness development to provide market linkages to farmers, (v) National Institute of Agriculture Marketing, and (vi) e-NAM (National Agriculture Market), which is a national electronic platform on which farmers can sell their produce.213 The scheme was allocated Rs 1,050 crore in 2018- 19.  This is 40% higher than the revised estimate in 2017-18.  However, in 2017-18, the allocation was revised down by 37%, from Rs 1,190 crore to Rs 750 crore.  As of October 2017, 470 mandis and 14 states have been integrated with e-NAM.214   

## Agricultural Mechanisation

Under the Sub-Mission on Agricultural Mechanisation, financial assistance is provided to farm training and testing institutes to train farmer technicians, nominees from state governments and agro-industries corporations, entrepreneurs.183 In 2018-19, Rs 1,165 crore is allocated under the scheme.183  This is 50% more than the revised estimate under the scheme in 2017-18.   

## Outcome Target:  Farm Power Availability To Increase To 2.2Kw/Ha By 2020.

Current status:  Between 1971-72 and 2012-13, 
farm power availability increased from 0.29kW/ha 
to 1.84 kW/ha, with an average annual growth of 
4.6%.  To achieve the outcome target, farm power 
availability should increase by 2.6%, less than the 
average growth rate observed as of 2012-13. 

To increase productivity, farm equipment which is 
durable, light-weight, low cost, and also specific to 
different crops and regions should be made 
available for small and marginal farmers.215  The 
Economic Survey 2015-16 recommended that there 
is a need for a rental market for agricultural 
machinery to make it more cost-effective.  

## Agricultural Research

The Indian Council of Agricultural Research 
(ICAR) is allocated Rs 4,599 crore for the year 
2018-19.184  This is 0.6% greater than the revised 
estimate in 2017-18.  In 2017-18, the allocation 
under ICAR increased from the actual expenditure 
of Rs 319 crore in 2016-17.  This is due to 
regrouping of salaries, pensions, and office 
expenditure from all schemes under ICAR.184 

Research under crop sciences (including 
horticulture science), and animal sciences 
(including fisheries science) is allocated Rs 1,051 
crore and Rs 571 crore.184  Observing that 
vegetable oils, pulses, cashew are among the major 
commodities which were imported between 2011 
and 2016, the Standing Committee on Agriculture 
(2017) stated that there is need for enhancing 
production of these commodities.216  It also 
recommended that the central government must 
allocate additional funds to ICAR for this purpose.   

The Committee noted that the production of animal 
vaccine is inadequate in the country.216  It 
recommended that adequate resources and 
manpower must be devoted to ICAR for the 
development of animal vaccines.   

Generation of internal revenue:  Between 2012-
16, the Standing Committee on Agriculture (2017) 
noted that ICAR has generated a revenue of Rs 734 
crore.  This revenue is generated through the sale of 
products, seeds, technology, and consultancy.216  
The Committee stating that there is a huge market 
for hybrid seeds, crop varieties, and agricultural 
machineries, recommended that internal revenue 
generation from ICAR institutes should be 
enhanced.  In 2015-16, against a revenue target of 
Rs 125.5 crore, Rs 60.6 (48.3%) crore was 
achieved.216  The target is set at Rs 154.7 crore for 
2016-17.  Divisions of animal science, crop 
science, and horticulture science are major 
contributors to the revenue receipts.216

## 

183 Demand No. 1, Expenditure Budget, Union Budget 2018-19, Ministry of Finance, February 1, 2018, http://www.indiabudget.gov.in/ub2018-19/eb/sbe1.pdf.  
184 Demand No. 2, Expenditure Budget, Union Budget 2018-19, Ministry of Finance, February 1, 2018, http://www.indiabudget.gov.in/ub2018-19/eb/sbe2.pdf. 185 Demand No. 3, Expenditure Budget, Union Budget 2018-19, Ministry of Finance, February 1, 2018, http://www.indiabudget.gov.in/ub2018-19/eb/sbe3.pdf. 027_Chapter_01_Economic_Survey_2017-18.pdf. Agriculture, http://rkvy.nic.in/. 189 "Cabinet approves ongoing Centrally Sponsored Scheme State Plans) - Rashtriya Krishi Vikas Yojana (RKVY) as Rashtriya Krishi Vikas Yojana- Remunerative Approaches for Agriculture and Allied Sector Rejuvenation (RKVYRAFTAAR) for three years i.e. 2017-18 to 2019- 20", Press Information Bureau, Ministry of Agriculture, November 1, 2017. 190 Report No. 42, Standing Committee on Agriculture: 'action taken by the Government on the observations/Recommendations contained in the Thirty Fifth Report (Sixteenth Lok Sabha) of the Standing Committee on Agriculture (2016-17) on 'Demands for Grants (2017-18)', Lok Sabha, August 10, 2017, http://164.100.47.193/lsscommittee/Agriculture/16_Agriculture_42.pdf. 191 Rajya Sabha Unstarred Question No 31, Ministry of Agriculture and Farmers Welfare, February 2, 2018. 192 "Cabinet approves Interest Subvention to banks on short-Term crop loans to farmers", Press Information Bureau, Ministry of Agriculture, June 14, 2017. 193 Report No. 35, Standing Committee on Agriculture: 'Demands for Grants 2017-18', Lok Sabha, http://164.100.47.193/lsscommittee/Agriculture/16_Agriculture_35.pdf. 194 Report of the Committee on Medium-term Path on Financial Inclusion, Reserve Bank of India, December 2015, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/FFIRA27F4530706A41A0BC394D01CB4892CC.PDF. 195 Handbook of Statistics on the Indian Economy, Reserve Bank of India, September 2017, https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/0HANDBOOK2017C9CF31D4B78241C9843272E441CD7010.PDF. 196 Report of the Advisory Committee on Flow of Credit to Agriculture, Reserve Bank of India, May 2004, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/53525.pdf. 19/bs/bs.pdf. http://agricoop.gov.in/sites/default/files/DFI%20Volume%204.pdf. http://www.niti.gov.in/writereaddata/files/document_publication/MSP-report.pdf. https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/PSGRE020315.pdf.   
2016, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/CFS070114RFL.pdf.  
                                                                                                                                                                                     

## Annexure

| BE                                     | RE      | BE      |
|----------------------------------------|---------|---------|
| Major schemes                          |         |         |
| AE                                     |         |         |
| % change of RE                         |         |         |
| 2017-18 over BE                        |         |         |
| % change of BE                         |         |         |
| 2018-19 over RE                        |         |         |
| 2016-17                                | 2017-18 | 2017-18 |
| 2017-18                                | 2017-18 |         |
| Interest Subsidy for Short Term Credit |         |         |
| to Farmers                             |         |         |
| 13,397                                 | 15,000  | 14,750  |
| Pradhan Mantri Fasal Bima Yojana       | 11,052  | 9,000   |
| Pradhan Mantri Krishi Sinchai Yojana   |         |         |
| (Per Drop More Crop)                   |         |         |
| 1,991                                  | 3,400   | 3,000   |
| Rashtriya Krishi Vikas Yojna           | 3,892   | 4,750   |
| National Mission on Horticulture       | 1,493   | 2,320   |
| National Food Security Mission         | 1,286   | 1,720   |
| Sub-Mission on Agriculture             |         |         |
| Mechanisation                          |         |         |
| 367                                    | 550     | 777     |

Note: AE: Actual expenditure; RE: Revised estimate; BE: Budgeted estimate. Sources: Union Budget 2018-19; PRS.   

| BE                     | RE      | BE      |
|------------------------|---------|---------|
| % change of RE         |         |         |
| 2017-18 over BE        |         |         |
| % change of BE         |         |         |
| 2018-19 over RE        |         |         |
|                        |         |         |
| AE                     |         |         |
| 2016-17                | 2017-18 | 2017-18 |
| 2017-18                | 2017-18 |         |
| ICAR Headquarters      | 319     | 4,383   |
| Crop Sciences          | 1,905   | 591     |
| Agricultural Education | 726     | 695     |
| Animal Sciences        | 1,206   | 388     |

Note: AE: Actual expenditure; RE: Revised estimate; BE: Budgeted estimate. Provision for ICAR headquarters suddenly increases in 2017-18 due to regrouping of salaries, pensions and office expenditure from all schemes (such as crop science and animal science). Sources: Union Budget 2018-19; PRS.   

| BE                                    | RE     | BE      |
|---------------------------------------|--------|---------|
|                                       |        |         |
| AE                                    |        |         |
| % change of RE                        |        |         |
| 2017-18 over BE                       |        |         |
| % change of BE                        |        |         |
| 2018-19 over RE                       |        |         |
| 2016-17                               |        | 2017-18 |
| 2017-18                               |        | 2017-18 |
| Rashtriya Gokul Mission               | -      | 190.00  |
| Livestock Health and Disease Control  | 246.23 | 298.77  |
| National Livestock Mission            | 249.18 | 310.00  |
| 387.81                                | 400.73 | 301.73  |
| Blue Revolution (including Integrated |        |         |
| Development and Management of         |        |         |
| Fisheries)                            |        |         |

## Note: Ae: Actual Expenditure; Re: Revised Estimate; Be: Budgeted Estimate. Sources: Union Budget 2018-19; Prs. Demand For Grants 2018-19 Analysis Railways

The Railways finances were presented on February 1, 2018 by the Finance Minister Mr. Arun Jaitley along with the Union Budget 2018-19.  The Ministry of Railways manages the administration of Indian Railways and policy formation through the Railway Board.  Indian Railways is a departmental commercial undertaking of the government.217  This note looks at the proposed expenditure of the Ministry of Railways for the year 2018-19, its finances over the last few years, and issues with the same.  

## Key Highlights

 
Outlay:  The total proposed capital outlay (or 
capital expenditure) for 2018-19 is Rs 1,48,528 crore which is a 24% increase from the 2017-18 revised estimates (Rs 1,20,000 crore). 
 
Revenue:  Railways' revenue for 2018-19 is 
estimated at Rs 2,01,090 crore which is a 7% increase from the revised estimates of 2017-18.   
 
Traffic revenue:  Total revenue from traffic for 
2018-19 is estimated at Rs 2,00,840 crore, which is a 7% increase from the revised estimates of 2017- 18.  Revenue from both freight and passenger traffic is expected to grow by 4% each.  In 2017-18 (revised estimates), the revenue from freight traffic increased by 13%, while revenue from passenger traffic increased by 4%.   
 
Expenditure:  Total expenditure for 2018-19 is 
projected at Rs 1,88,100 crore which is a 4% increase from the revised estimates of 2017-18.  In 2017-18 (revised estimates), total expenditure increased by 13%.  

## 2018-19 Budget Announcements

Key announcements and proposals related to Railways made in Budget 2018-19 include:  

 
Railway infrastructure:  A large part of the 
proposed capital expenditure will be devoted to capacity creation.  18,000 km of doubling, third and fourth line works and 5,000 km of gauge conversion will be undertaken to eliminate capacity issues and transform the entire network into broad gauge.  
 
About 12,000 wagons, 5,160 coaches and approximately 700 locomotives will be procured during 2018-19 for the Eastern and Western Dedicated Freight Corridors.  A major programme has also been initiated to strengthen infrastructure at the goods sheds and fast track commissioning of private sidings.   
 
4,267 unmanned level crossings in the broad gauge network will be eliminated in the next two years. 
 
Modern train-sets with state-of-the-art amenities and features are being designed at the Integrated Coach Factory, Perambur.  The first train set will be commissioned this year.   
 
A specialised Railways university will be set up at Vadodara.  The University will train manpower required for high speed projects.   
 
Station development:  All stations with more than 
25,000 footfalls will have escalators.  All railway stations and trains will be progressively provided with wi-fi.  CCTVs will be provided at all stations and on trains to enhance passenger security. 
 
Suburban Railways:  In the Mumbai suburban 
network, 150 km of additional suburban network is being planned at a cost of over Rs 40,000 crore, including elevated corridors on some sections.  A suburban network of 160 km at an estimated cost of Rs 17,000 crore is being planned for Bengaluru.   

## Overview Of Finances218,219 Sustainability Of Railways Finances

In the last few years, Railways has been struggling to run 
its transportation business, and generate its own revenue.  
The growth rate of Railways' earnings from its core 
business of running freight and passenger trains has been 
declining.  This is due to a decline in the growth of both 
freight and passenger traffic (see Figure 1).  Railways is 
also slowly losing traffic share to other modes of 
transport.  The share of Railways in total freight traffic 
has declined from 89% in 1950-51 to 30% in 2011-12.220   

Note: RE - Revised Estimates; BE - Budget Estimates.  
Sources:  Railways Budget Documents; PRS.   

On the other hand, Railways' primary expenditure, 
which is towards the payment of salaries and pension, 
has been gradually increasing (with a jump in 2016-17 
due to implementation of Pay Commission 
recommendations).  There is an increasing expenditure 
on pension too, which is unproductive, as this does not 
generate any revenue for the Railways.  The pension bill 
is expected to increase further in the years to come, as 

about 40% of the Railways staff was above the age of 50 
years in 2016-17.221   
A decline in internal revenue generation has meant that Railways funds its capital expenditure through budgetary support from the central government and external borrowings.  While the support from central government has mostly remained consistent, Railways' external borrowings have been increasing.  Various committees have noted that an increased reliance on borrowings will further exacerbate the financial situation of Railways.222,223  

## Railways' Revenue

Indian Railways has three primary sources of revenue: (i) its own internal resources (revenue from freight and passenger traffic, leasing of railway land, etc.), (ii) budgetary support from the central government, and (iii) extra budgetary resources (such as market borrowings, institutional financing).224   

## Gross Budgetary Support (Gbs)

The central government supports Railways in the form of GBS, in order to expand its network and invest in capital expenditure.  In 2018-19, the gross budgetary support from central government is proposed at Rs 55,088 crore. This is a 38% increase from the revised estimates of 2017-18 (Rs 41,813 crore).  However, note that, in 2017- 18 (revised estimates) GBS decreased by 12%.  That is, the central government gave Railways Rs 5,231 crore less than what it had allocated in 2016-17.   

## Internal Resources

Railways earns its internal revenue primarily from passenger and freight traffic.  In 2016-17, freight traffic contributed to about 63% of the internal revenue.  In comparison, passenger traffic contributed to about 28% of the internal revenue.  In 2018-19, Railways expects to earn 61% of its internal revenue from freight and 26% 
from passenger traffic.  The remaining 10% is earned through other miscellaneous sources such as parcel service, coaching receipts, and platform tickets.   
Passenger traffic and revenue:  In 2018-19, Railways expects to earn Rs 52,000 crore from passenger traffic, an increase of 4% over the revised estimates of 2017-18. The growth in passenger traffic for 2018-19 is estimated at 0.2%.  In 2017-18 (revised estimates), revenue from passenger traffic increased by 4%, and passenger traffic increased by 0.7%.   
Freight traffic and revenue:  In 2017-18, revenue from freight traffic was Rs 1,17,500 crore (revised estimates). In 2018-19, Railways expects to earn Rs 1,21,950 crore from goods traffic, an increase of 4% from the revised estimates.  In 2016-17 (latest actuals available), Railways generated most of its freight revenue from the transportation of coal (43%), followed by cement (8%), and foodgrains (7%) (see Figure 2). In order to improve freight traffic, in 2017-18, the Railways Ministry implemented several policies such as: (i) liberalising automatic freight rebate scheme in empty flow directions (routes with low freight traffic), (ii) 

getting into long term tariff contracts with key freight 
customers, and (iii) introducing double stack dwarf 
containers as a new delivery model to increase 
loadability of trains.225   

Sources:  Statement of Revenue Receipts and Expenditure 2018-19, Ministry of Railways; PRS.   
Extra Budgetary Resources (EBR) 

EBR includes market borrowings, financing from banks, 
external investments, etc.  External investments in Indian 
Railways could be in the form of public private 
partnerships (PPPs), joint ventures (JVs), or market 
financing by attracting private investors to buy bonds or 
equity shares in Railways.  Most of Railways EBR 
comes in the form of market borrowings from the Indian 
Railways Finance Corporation (IRFC).222   

In 2018-19, Rs 81,940 crore is estimated to be raised 
through EBR, which is an increase of 19% over revised 
estimates of 2017-18 (Rs 69,100 crore).   

## Capital Outlay

The total proposed capital outlay (amount spent on 
capital expenditure) for 2018-19 is Rs 1,48,528 crore.  
This is about 24% higher than the revised plan outlay for 
2017-18 (Rs 1,20,000 crore).   

 
2016-17 
Actuals 
2017-18 
Revised 
2018-19 
Budget 
% Change 
(BE 2018-
19/ RE 
2017-18) 
52,579 
69,100 
81,940 
19% 
Extra Budgetary Resources 
45,232 
40,000 
55,088 
38% 
Gross Budgetary Support 
12,125 
10,900 
11,500 
6% 
Internal Resources Total 
109,935 
120,000 
148,528 
24% 

Note: RE - Revised Estimates; BE - Budget Estimates. Sources:  Notes on Demand for Grants for Ministry of Railways, 2018- 19; PRS.   

Majority of this capital expenditure will be financed 
through extra budgetary resources (55%), followed by 
the budgetary support from the central government 
(37%).  Railways will fund only 8% of this capital 
expenditure from its own internal resources.  Figure 3 

below shows the trends in capital outlay over the last decade.  Railways continues to operate as a commercial undertaking, but its capability to increase its own revenue stream has been declining.   
 
Note: RE - Revised Estimates, BE - Budget Estimates. 

Sources:  Railways Budget documents 2009-18; PRS.   
Challenges in raising revenue The Committee on Restructuring Railways (2015) had observed that raising revenue for Railways is a challenge because: (i) investment is made in projects that do not have traffic and hence do not generate revenue, (ii) the unbalanced mix of passenger and freight traffic does not help generate revenue, (iii) the efficiency improvements do not result in increasing revenue, and (iv) delays in projects results in cost escalation, which makes it difficult to recover costs.222  

## Social Service Obligations Of The Railways

The NITI Aayog (2016) had noted that Indian Railways carries out various activities in national interest which are not driven strictly by commercial principles.226  
Railways' passenger business faced losses of about Rs 
33,000 crore in 2014-15 due to its social service obligations.226  Such social service obligations include: (i) pricing essential commodities lower than cost, (ii) low fares (cheaper tickets for second class travel) and passenger concessions (such as cheaper tickets for senior citizens, army veterans), (iii) uneconomic branch lines, and (iv) new lines not yet profitable. However, NITI Aayog had also noted that the data related to the cost of running passenger business is not scientific and accurate.  Therefore, it is difficult to compute accurately the levels of under-recoveries.  The calculation of social costs does not factor the efficiency of various expenditures (whether fuel consumption is optimal, maintenance practices and costs are reasonable, etc.).226  The calculation also does not factor in Railways' potential to leverage existing assets (such as stations, land banks) that could increase its revenue sources.226 The Standing Committee on Railways (2017) had recommended that the Ministry of Finance should reimburse the Ministry of Railways on losses made on all strategically important lines.227  Till 2016-17, the Ministry of Finance was reimbursing Railways for operational losses on six strategic lines.   

## Railways' Expenditure

In 2016-17 (latest actuals available), Indian Railways 
spent most of its money on staff (41%), followed by 
expenses on pension fund (21%), and fuel (17%).  In 
2018-19, the total expenditure is estimated at Rs 
1,88,100 crore which is a 4% increase over the revised 
estimates of 2017-18.   

## Staff Wages And Pension

Staff wages and pension together comprise more than 
half of the Railways' expenditure.  As per the revised 
estimates of 2017-18, the expenditure on Railway staff 
(Rs 72,706 crore) was higher than the expenditure in 
2016-17 by 4%, and the expenditure in 2015-16 by 28%.  
This was due to the implementation of the Seventh Pay 
Commission in 2016-17.   

In 2017-18 (revised estimates), Rs 44,200 crore was 
allocated to the Pension Fund.  Therefore, the total 
expenditure on staff and pension in 2017-18 was Rs 
1,16,906 crore, which is about 65% of the total 
expenditure that year.   

For 2018-19, the expenditure on staff is estimated at Rs 
76,452 crore.  Allocation to the Pension Fund is 
estimated at Rs 47,600 crore.  These would constitute 
about 66% of the Railways' expenditure in 2018-19.  

The Committee on Restructuring Railways (2015) had 
observed that the expenditure on staff is extremely high 
and unmanageable.  This expense is not under the 
control of Railways and keeps increasing with each Pay 
Commission revision.222  It has also been observed that 
employee costs (including pensions) is one of the key 
components that reduces Railways' ability to generate 
surplus, and allocate resources towards operations.222  

## Fuel And Electricity

The expense on fuel and electricity increased by 5%, 
from Rs 28,300 crore in 2016-17 to Rs 29,808 crore in 
2017-18 (revised estimates).  In 2018-19, the expense on 
fuel and electricity is estimated to be Rs 30,328 crore.   

## Depreciation Reserve Fund (Drf)

Appropriation to the DRF is made annually based on the 
recommendations of the Railways Convention 
Committee, and is intended to finance the costs of new 
assets replacing the old ones.223  The Standing 
Committee on Railways (2015) had observed that 
appropriation to the DRF is obtained as a residual after 
payment of the dividend and appropriation to the 
Pension Fund, instead of the actual requirement for 
maintenance of assets.223  

In the last few years, appropriation to the DRF has 
decreased significantly.  In 2016-17, appropriation to the 
DRF was Rs 5,200 crore.  This means that Railways 
spent Rs 5,200 crore on asset maintenance in 2016-17, as 
compared to Rs 7,775 and Rs 5,500 in 2014-15 and 
2015-16 respectively.  Under-provisioning for the DRF 

has been observed as one of the reasons behind the decline in track renewals, and procurement of wagons and coaches.222,223 In 2018-19, appropriation to the DRF is estimated at Rs 
500 crore, 90% lower than the revised estimates of 2017-
18 (Rs 5,000 crore).  Provisioning Rs 500 crore towards depreciation might be an extremely small amount considering the scale of infrastructure managed by the Indian Railways.   

## Improving Railways Infrastructure

In this Budget Speech, the Finance Minister announced that a large part of the proposed capital expenditure will be devoted to capacity creation, and track improvement.  The Railways Convention Committee (2017) had noted that while rail traffic has increased more than 14 times between 1950 and 2014, the track infrastructure has not increased at an equivalent pace.  This has been attributed to significant under-investment in the Railways. Tracks are subjected to heavy wear and tear, and need to be maintained and upgraded periodically.  The Sam Pitroda Committee on Railway Modernisation (2012) had recommended modernisation of 19,000 km of tracks between 2012 and 2017. Poor track infrastructure also leads to safety concerns.  Majority of Railway accidents (about 60%) are caused due to derailments. The Standing Committee on Railways (2016) had noted that one of the reasons for derailments is defect in the track or rolling stock. It had recommended that 4,500 km of track length should be renewed annually.  However, in 2015-16, 2,828 km of track length was commissioned which included 813 km of new lines, 1,043 km of gauge conversion and 972 km of doubling.  The achievements were expected to be on similar lines for 2016-17.  For 2017-18, Railways had set a target of 3,500 km for network expansion. 

Sources:  16th Report: Track Upgradation and Modernisation, Railway 
Convention Committee, August 10, 2017; 13th Report: Demands for Grants 
(2017-18)", Standing Committee on Railways, March 10, 2017; 12th Report: 
Safety and security in Railways", Standing Committee on Railways, 
December 14, 2016; PRS.  

## Safety

Last year, the Rashtriya Rail Sanraksha Kosh was created to provide for passenger safety in Railways.  It was to have a corpus of Rs one lakh crore over a period of five years (Rs 20,000 crore per year).  The central government was to provide a seed amount of Rs 1,000 crore, and the remaining amount would be raised by the Railways from their own revenues or other sources. As per the revised estimates of 2017-18, no money was allocated towards this fund.  In 2018-19, Rs 5,000 crore has been allocated for it.  With the Railways struggling to meet its expenditure and declining internal revenues, it is unclear how Railways will fund the Rail Sanraksha Kosh.  The fund will require an allocation of Rs 94,000 
crore (minus the central government's proposed contribution, and this year's allocation) for the next three years (considering a five-year period for the corpus). Railways used to have a Railway Safety Fund which received about 3% of allocation in the capital outlay.  In 
2015-16 (actuals), Rs 2,661 crore was allocated to this fund.  Since 2016-17, no allocations have been made to this fund.   

## Dividend

Railways used to pay a return on the budgetary support it 
received from the government (GBS) every year, known 
as dividend.  The rate of this dividend was determined by 
the Railways Convention Committee, and was about 5% 
in 2016-17.223  From 2016-17, the requirement of paying 
dividend was waived off.  The last dividend amount paid 
was in 2015-16, which was Rs 8,722 crore.   

The Standing Committee on Railways (2017) had noted 
that part of the benefit from dividend is being utilised to 
meet the shortfall in the traffic earnings of Railways.227  
It had noted that this defeats the purpose of removing the 
dividend liabilities since they are not utilised in creating 
assets or increasing the net revenue of Railways.  

## Surplus And Operating Ratio

Railways' surplus is calculated as the difference between 
its total revenue (total traffic receipts and other 
miscellaneous receipts) and total expenditure (working 
expenses and appropriation to pension and depreciation 
funds).  In 2018-19, Railways expects to generate a 
surplus of Rs 12,990 crore.  This is a 102% increase 
from the revised estimates of 2017-18 (Rs 6,425 crore).  
In 2017-18, Railways' surplus increased by 31% (Rs 
1,512 crore).   

Operating Ratio is the ratio of the working expenditure 
(expenses arising from day-to-day operations of 
Railways) to the revenue earned from traffic.  Therefore, 
a higher ratio indicates a poorer ability to generate 
surplus that can be used for capital investments such as 
laying new lines, deploying more coaches, etc.   

The Operating Ratio for 2018-19 is projected at 92.8%.  
In 2017-18 (revised estimates), the Operating Ratio was 
96% (see Figure 4).   

## Figure 33: Operating Ratio

Notes: Numbers for 2017-18 are Budget Estimates vs Revised Estimates. Sources: Railways Budget documents 2009-2018; PRS.   
                                                                                                                                                                                     
226 Reviewing the Impact of "Social Service Obligations" by Indian Railways, NITI Aayog, September 2016, http://niti.gov.in/writereaddata/files/document_publication/Social-Costs.pdf.  

227 "13th Report: Demands for Grants (2017-18)", Standing Committee on Railways, March 10, 2017, 
http://164.100.47.193/lsscommittee/Railways/16_Railways_13.pdf.    
 

## Annexure I: Railways Budget 2018-19 Summary

Table 45: Railways Revenue and Expenditure for 2018-19 (in Rs crore) 
 
 
2016-17 
Actuals 
2017-18 
Budget 
% Change 
(2017-18 RE/ 
2018-19 
Budget 
Estimates 
2017-18 
Revised 
Estimates 
2016-17 Actuals) 
Estimates 
% Change 
(2018-19 BE/ 
2017-18 RE) 
 
Receipts 
  
  
  
  
  
  
1 
Gross Traffic Receipts  
165,289 
188,998 
187,225 
13% 
200,840 
7% 
2 
Miscellaneous 
90 
500 
200 
122% 
250 
25% 
3 
Total Revenue (1+2) 
165,382 
189,498 
187,425 
13% 
201,090 
7% 
 
Expenditure 


4 
Ordinary Working Expenses 
118,830 
129,750 
130,200 
10% 
138,000 
6% 
5,200 
5,000 
5,000 
-4% 
500 
-90% 
5 
Appropriation to Depreciation Reserve Fund 
6 
Appropriation to Pension Fund 
35,000 
43,600 
44,100 
26% 
47,500 
8% 
7 
Total Working Expenditure (4+5+6) 
159,030 
178,350 
179,300 
13% 
186,000 
4% 
8 
Miscellaneous 
1,440 
2,200 
1,700 
18% 
2,100 
24% 
9 
Total Expenditure (7+8) 
160,469 
180,550 
181,000 
13% 
188,100 
4% 
10 
Net Surplus (3-9) 
4,913 
8,948 
6,425 
31% 
12,990 
102% 
2,515 
2,000 
1,500 
-40% 
1,000 
-33% 
11 
Appropriation to Railway Development Fund 
12 
Appropriation to Capital Fund 
2,398 
5,948 
4,925 
105% 
6,990 
42% 
13 
Appropriation to Debt Service Fund 
- 
- 
- 
- 
- 
- 
0 
1,000 
0 
0% 
5,000 
- 
14 
Appropriation to Rashtriya Rail Sanraksha Kosh 
15 
Operating Ratio  
96.5% 
94.57% 
96.0% 
- 
92.8% 
- 

Note: RE - Revised Estimate, BE - Budget Estimate. Sources: Statement of Revenue Receipts and Expenditure, Railways Budget 2018-19; PRS.   

## Explanatory Notes Performance Parameters

1. 

'Net Surplus' represents excess of receipts over expenditure after the Dividend liability (payment for investment in Railway capital) of General Revenues has been paid off.  
2. 

'Operating Ratio' is the ratio of operating expenses to receipts. A lower ratio indicates higher surplus availability for investments. 

## Railway Funds

3. 

Depreciation Reserve Fund - Finances the cost of new assets replacing old assets including the cost of any improved features. Appropriation to this fund are made on the recommendations of the Railway Convention Committee (RCC).  

4. 
Pension Fund - Finances all pension payments to retired Railway staff.  

Table 46: Freight traffic details (NTKM in millions; Earnings in Rs crore) 
 
2016-17 Actuals 
2017-18 Revised 
2018-19 Budget 
% Change 2018-19 
Estimates 
% Change 2017-18 
RE/ 2016-17 Actuals 
Estimates 
BE/ 2017-18 RE 
Commodity 
NTKM  
Earnings 
NTKM 
Earnings 
NTKM 
Earnings 
NTKM 
Earnings 
NTKM 
Earnings 
Coal 
249,615 
45,229 
253,261 
49,907 
1% 
10% 
263,304 
51,820 
4% 
4% 
12,461 
2,062 
12,092 
2,122 
-3% 
3% 
12,811 
2,204 
6% 
4% 
Raw materials for steel plants except iron Pig Iron & finished steel 
44,027 
7,672 
46,296 
8,646 
5% 
13% 
47,909 
8,842 
3% 
2% 
Iron Ore 
39,743 
8,176 
47,959 
10,485 
21% 
28% 
49,763 
10,753 
4% 
3% 
Cement 
54,600 
8,630 
59,504 
9,969 
9% 
16% 
61,596 
10,163 
4% 
2% 
Foodgrains 
57,809 
7,506 
61,386 
8,453 
6% 
13% 
66,250 
9,017 
8% 
7% 
Fertilisers 
39,216 
5,561 
39,572 
5,951 
1% 
7% 
41,900 
6,229 
6% 
5% 
Petroleum & Lubricants 
28,518 
5,686 
27,378 
5,788 
-4% 
2% 
28,575 
5,973 
4% 
3% 
Container Service 
44,294 
4,716 
49,013 
5,587 
11% 
18% 
51,923 
5,894 
6% 
5% 
Other Goods 
49,891 
6,790 
55,779 
8,050 
12% 
19% 
59,130 
8,435 
6% 
5% 
Miscellaneous earnings 
- 
2,311 
- 
2,543 
0% 
10% 
- 
2,620 
0% 
3% 
Total 
620,174 
104,339 
652,240 
117,500 
5% 
13% 
683,161 
121,950 
5% 
4% 

Notes: NTKM - Net Tonne Kilometre (1 NTKM is the net weight of goods carried for a kilometre); RE - Revised Estimates; BE - Budget Estimates. Sources: Statement of Revenue Receipts and Expenditure, Railways Budget 2018-19; PRS.   

|                     |                | 2016-17 Actuals    |
|---------------------|----------------|--------------------|
| 2017-18 Revised     | 2018-19 Budget | % Change 2018-19   |
| Estimates           |                |                    |
| % Change 2017-18    |                |                    |
| RE/ 2016-17 Actuals | Estimates      | BE/ 2017-18 RE     |
|                     | PKM            | Earnings           |
| Suburban            |                |                    |
|                     |                |                    |
| First Class         |                |                    |
| 8,783               | 356            | 8,693              |
| Second Class        |                |                    |
| (Ordinary)          |                |                    |
| 136,634             | 2,334          | 137,347            |
| Total Suburban      |                |                    |
| 145,417             | 2,689          | 146,040            |
| Non Suburban        |                |                    |
|                     |                |                    |
| AC First class      |                |                    |
| 1,796               | 497            | 1,714              |
| AC Sleeper          |                |                    |
| 23,806              | 3,494          | 22,380             |
| AC 3 Tier           |                |                    |
| 72,315              | 9,263          | 70,892             |
| Executive Class     |                |                    |
| 463                 | 145            | 424                |
| AC Chair Car        |                |                    |
| 11,546              | 1,539          | 10,899             |
| First Class (M&E)   |                |                    |
| 85                  | 14             | 93                 |
| First Class         |                |                    |
| (ordinary)          |                |                    |
| 345                 | 13             | 367                |
| Sleeper Class       |                |                    |
| (M&E)               |                |                    |
| 289,015             | 13,194         | 289,047            |
| Sleeper Class       |                |                    |
| (ordinary)          |                |                    |
| 3,842               | 152            | 3,646              |
| Second Class        |                |                    |
| (M&E)               |                |                    |
| 341,182             | 9,886          | 350,699            |
| Second Class        |                |                    |
| (Ordinary)          |                |                    |
| 260,024             | 5,394          | 261,436            |
| Total Non-          |                |                    |
| Suburban            |                |                    |
| 1,004,419           | 43,591         | 1,011,597          |
| Total Passenger     |                |                    |
| 1,149,836           | 46,280         | 1,157,637          |

Notes: PKM - Passenger Kilometre (One PKM is when a passenger is carried for a kilometre); RE - Revised Estimates; BE - Budget Estimates. Sources: Statement of Revenue Receipts and Expenditure, Railways Budget 2018-19; PRS.   

## Demand For Grants 2018-19 Analysis Health And Family Welfare

The Ministry of Health and Family Welfare (MoHFW) has two departments: (i) the Department of Health and Family Welfare, and (ii) the Department of Health Research. The Department of Health and Family Welfare is responsible for functions including (i) implementing health schemes, and (ii) regulating medical education and training.  The Department of Health Research is broadly responsible for conducting medical research. This note analyses the financial allocation trends and key issues concerning the health sector. 

## Overview Of Finances

In 2018-19, the MoHFW received an allocation of Rs 54,600 crore. This allocation is an increase of 2% over the revised estimates of 2017-18 (Rs 53,294 crore).228 Under the Ministry, the Department of Health and Family Welfare accounts for 97% of the allocation, at Rs 52,800 crore.  This is followed by the Department of Health Research (3%) at Rs 1,800 crore.  Table 1 provides details on the two departments under the MoHFW. 

| RE         | BE      |
|------------|---------|
| Item       |         |
| Actuals    |         |
| 2016-17    | 2017-18 |
| % Change   |         |
| (RE to BE) |         |
| 37,671     |         |
| 51,551     | 52,800  |
| Health &   |         |
| Family     |         |
| Welfare    |         |
| 1,324      | 1,743   |
| Health     |         |
| Research   |         |
| Total      | 38,995  |

Note: BE - Budget Estimate; RE - Revised Estimates. Source: Demand Nos. 42 & 43, Ministry of Health and Family Welfare, Union Budget 2018-19, PRS. 

The revised estimate in 2017-18 for the Department of Health and Family Welfare overshot the budget estimate of that year by Rs 4,198 crore.  Similarly, the Department of Health Research also overshot the budget estimate by Rs 243 crore. Table 2 contains the split in the allocation under the MoHFW for the year 2018-19. 

MoHFW (2018-19) (in %) 
| Expenditure head              | Allocation (%)                |
|-------------------------------|-------------------------------|
| National Health Mission       | 55%                           |
| Autonomous Bodies             | 13%                           |
| 7%                            | Pradhan Mantri Swasthya       |
| Suraksha Yojana               |                               |
| 4%                            | National AIDS and STD Control |
| Programme                     |                               |
| Rashtriya Swasthya Bima Yojna | 4%                            |
| Family Welfare Schemes        | 1%                            |
| Others                        | 16%                           |
| Total                         | 100%                          |

Source:  Demand Nos. 42 & 43, Ministry of Health and Family 
Welfare, Union Budget 2018-19, PRS. 
Note: Autonomous Bodies include the All India Institute of 
Medical Science and Post Graduate Institute of Medical 
Education and Research, Chandigarh. 

Key allocation trends are as follows (see Table 3): 

 
The National Health Mission (NHM) received the highest allocation at Rs 30,130 crore and constitutes 55% of the total ministry allocation. The allocation is a 2% decrease over the revised estimates of 2017-18.  Under the NHM, the rural component, i.e., the National Rural Health Mission (NRHM) has been allocated Rs 24,280 crore, a 5% decrease over the revised estimates of 2017-18.  The allocation for National Urban Health Mission (NUHM) has increased by 34% at Rs 875 crore.  Note that the NUHM under NHM constitutes 2.9% of its allocation for 2018-19. 
 
Rashtriya Swasthya Bima Yojna has seen the biggest increase at 325% (Rs 2,000 crore) over the revised estimates of 2017-18.   
 
Higher allocation has been made for Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) at Rs 3,825 crore (20% increase).  It focusses on correcting regional imbalances in the availability of affordable and reliable tertiary healthcare services. 
 
Family Welfare Schemes and the National AIDS and STD Control Programme have seen a decrease of 2% and 3% respectively from the revised estimates of 2017-18.  Note that both these schemes spent more than their budget estimates in 2017-18.   
 
Allocation to autonomous institutes (13%) like the AIIMS saw a decrease of 1% at Rs 6,900 crore from the revised estimates of 2017-18.   

| RE          | BE      |
|-------------|---------|
| Major Heads |         |
| Actuals     |         |
| 2016-17     | 2017-18 |
| % Change    |         |
| (RE to BE)  |         |
| NHM (total) | 22,454  |
| -NRHM       | 19,826  |
| -NUHM       | 491     |
| -Others     | 2,137   |
| 5,467       | 6,971   |
| Autonomous  |         |
| Bodies      |         |
| (AIIMS,     |         |
| PGIMER,     |         |
| etc.)       |         |
| PMSSY       | 1,953   |
| 1,749       | 2,163   |
| National    |         |
| AIDS & STD  |         |
| Control     |         |
| Programme   |         |
| 466         | 471     |
| Rashtriya   |         |
| Swasthya    |         |
| Bima Yojna  |         |
| 575         | 788     |
| Family      |         |
| Welfare     |         |
| Schemes     |         |
| Others      | 6,331   |
| Total       | 38,995  |

Note: BE - Budget Estimate; RE - Revised Estimates; NHM- National Health Mission; NRHM- National Rural Health Mission; NUHM- National Urban Health Mission; PMSSY- Pradhan Mantri Swasthya Suraksha Yojana. Source: Demand No. 42 & 43, Ministry of Health and Family Welfare, Union Budget 2018-19, PRS. 

## Proposals For The Health Sector In The Union Budget 2018-19


 
The National Health Protection Scheme will be launched to cover approximately 50 crore beneficiaries (poor and vulnerable families) for secondary and tertiary care hospitalisation (part of Ayushman Bharat programme). 

 

 
 
1.5 lakh Health and Wellness centres to provide comprehensive health care (including non-communicable diseases, and maternal and child health services).  These centres will also provide free essential drugs and diagnostic services (part of Ayushman Bharat programme). 
 
Additional Rs 600 crore to provide nutritional support to all Tuberculosis patients at the rate of Rs 500 per month for the duration of their treatment. 
 
 
Setting up 24 new government medical colleges and 
hospitals by upgrading existing district hospitals. 

## Trends In Allocation And Expenditure

As indicated in Figure 1, the allocation to the Department of Health and Family Welfare has increased from Rs 11,366 crore in 2006-07 to Rs 52,800 crore in 2018-19.  Over the period 2006-18, the Compound Annual Growth Rate (CAGR) has been 13%.  CAGR is the annual growth rate over a certain period of time.   
18) for 2018-19. Source: Union Budgets, 2006-07 to 2018-19; PRS. 

Table 4 indicates the actual expenditure of the 
Department of Health and Family Welfare 
compared with the budget estimates of that year 
(2010-17).  The utilisation has been over 100% in 
the last three years. 

Table 4: Comparison of budget estimates and the actual expenditure (2010-17) (in Rs crore) 
Year 
BE 
Actuals 
Actuals/BE 
2010-11 
23,530 
22,765 
82% 
2011-12 
26,897 
24,355 
82% 
2012-13 
30,702 
25,133 
82% 
2013-14 
33,278 
27,145 
82% 
2014-15 
35,163 
30,626 
87% 
2015-16 
29,653 
30,626 
103% 
2016-17 
37,066 
37,671 
102% 
2017-18 
48,853 
53,294* 
109% 

Note: BE - Budget Estimates; *Revised Estimates. Sources: Union Budgets, 2010-18; PRS. 

## Public Health Spending

The public health expenditure (sum of central and 
state spending) has remained constant at 
approximately 1.3% of the GDP between 2008-09 
and 2015-16, and increased marginally to 1.4% in 
2016-17.229,230  Note that the National Health 
Policy, 2017 has proposed to increase the public 
health expenditure to 2.5% of the GDP by 2025.231   

Including the private sector, the total health 
expenditure as a percentage of GDP is estimated at 
4.0%.232  If 1.3% is attributed to public spending in 
India, then effectively, 2.7% is spent by the private 
sector.  This means that out of the total 
expenditure, about one-third is contributed by the 
public sector.  As per World Health Statistics 
(2014), this contribution by the public sector to the 
total expenditure on health is low as compared to 
other developing countries like Brazil (46%), China 

(56%), and Indonesia (39%).233  Among developed countries, the public spending on healthcare in United Kingdom and United States of America is 83% and 48% respectively.  The public-private split in the total health expenditure is shown in Figure 2 below. 

## 

Further, India also spends one of the lowest amounts ($23) in terms of per capita public health expenditure, in comparison to other developing countries like Indonesia ($38), Sri Lanka ($71), and Thailand ($177).234 It is estimated that 68% of the health expenditure is borne by consumers in India.235  Household health expenditures are the expenditures incurred by households on health care and includes out of pocket expenditures and prepayments (for example, insurance).  Out of pocket expenditure are the payments made directly by individuals at the point of service where the entire cost of the health good or service is not covered under any financial protection scheme.  In India, such expenditure is typically financed by household revenues (71%) (see Figure 3).  Only nine countries (out of 192) have a higher out of pocket spending as a proportion of total healthcare expenditure.246 The highest percentage of out of pocket health expenditure (52%) was made towards medicines.235 This was followed by private hospitals (22%), medical and diagnostic labs (10%), and patient transportation, and emergency rescue (6%). Due to high out of pocket healthcare expenditure, about 7% population is pushed below poverty threshold every year.238   

## National Health Protection Scheme

A new insurance scheme, the National Health 
Protection Scheme was proposed in the Union 
Budget 2018-19.236  This scheme will provide 
coverage to 10 crore poor and vulnerable 
families of up to Rs 5,00,000 per family per year 
for secondary and tertiary care hospitalisation.  
However, the funding for this scheme is not 
specified in the budget books.   

The two major insurance schemes funded by the 
central government are Rashtriya Swasthya 
Bima Yojana (RSBY) and Central Government 
Health Scheme.  Note that RSBY has seen the 
biggest increase in its budgetary allocation at 
325% (Rs 2,000 crore) in 2018-19 over the 
revised estimates of 2017-18. 

## Insurance And Universal Health Coverage

Out of the total number of persons covered under 
health insurance, three-fourths of the persons are 
covered under government sponsored health 
insurance schemes and the balance one-fourth are 
covered by policies issued by general and health 
insurers.237  Note that 86% of rural population and 
82% of urban population are still not covered under 
any scheme of health expenditure support.238    

In terms of government sponsored health insurance, 
the Net Incurred Claims Ratio (ICR) increased 
from 87% during 2012-13 to 122% in 2016- 17.237  
A higher Net ICR means more claims have been 
paid in comparison to the premiums collected 
leading to losses.  On the other hand, there has been 
a gradual decline in the Net ICR of other private 
insurance providers.   

 

## Rashtriya Swasthya Bima Yojana

The Rashtriya Swasthya Bima Yojana (RSBY), launched in 2008, aims to (i) provide financial protection against high health cost, and (ii) improve healthcare access for below poverty line households.239  The beneficiaries under RSBY are entitled to hospitalisation coverage up to Rs 30,000 per annum on family floater basis, for most of the diseases that require hospitalisation.  The beneficiaries need to pay Rs 30 as registration fee for a year.  Only 12% of the urban and 13% of the rural population from the targeted population was covered by schemes such as the RSBY or other similar state sponsored schemes.239 Figure 4 shows the RSBY allocation since 2009. The total allocation to the scheme is Rs 2,000 crore in 2018-19, a 325% increase over the revised estimates of 2017-18.  The CAGR between 2009- 18 has been 22% for RSBY allocation.   

## Central Government Health Scheme

With regard to the Central Government Health Scheme (CGHS), the allocation for 2018-19 is Rs 1,305 crore (5% increase over the revised estimates of 2017-18).  The scheme provides healthcare services to central government employees, Members of Parliament, among others. The Standing Committee noted the low capacity of utilising financial resources by CHGS.246  For example, only 60% of the funds had been used under CGHS and yet an increase in allocation was sought for 2017-18.246  Further, it noted that many hospitals have de-empanelled themselves from CGHS mainly due to non-settlement of their dues by the government. 

## Universal Health Coverage

With regard to health insurance in general, the High Level Expert Group (HLEG) (2011) recommended that all government funded insurance should be integrated with the Universal Health Coverage (UHC) system.240  In addition, all health insurance cards must be replaced by a national health entitlement card. 

UHC includes ensuring equitable access for all 
Indian citizens to affordable and appropriate health 
services of assured quality.  This universal 
coverage is not linked to the consumer's ability to 
pay.240  The Finance Minister mentioned in his 
2018-19 Budget Speech that India is making steady 
progress towards UHC.236   

The World Bank measures the progress made in the 
health sector in select countries of the world 
according to the UHC Index.  On this Index, India 
ranks 143 among 190 countries in terms of per 
capita expenditure on health.241,242   

Experts have recommended that decisions must be 
taken with respect to whether a consolidation of 
existing services will be undertaken or a new 
package will be offered in parallel with the existing 
services under UHC.243  It has been estimated that 
to achieve UHC, the public expenditure in health 
must increase to at least 2.5% of the GDP by the 
end of 2017 and at least to 3% of GDP by 2022.240  

Further, it is estimated that the government would 
require a substantial spending increase at Rs 1,160 
per capita per year if it is to be the sole provider of 
the comprehensive package of services.243 

## Financial Allocations To Outcomes National Health Mission

The National Health Mission (NHM) consists of 
two sub missions, the National Rural Health 
Mission (NRHM) (includes health interventions in 
rural areas) launched in 2005 and the National 
Urban Health Mission (includes health 
interventions in urban areas) launched in 2013.   

## Components Of Nhm

NHM includes various components, these include: 
(i) reproductive, maternal, new born and child 
health services (RCH Flexi Pool), (ii) NRHM 
Mission Flexi Pool for strengthening health 
resource systems, innovations and information, (iii) 
immunisation including the Pulse Polio 
Programme, (iv) infrastructure maintenance, and 
(v) National Disease Control Programme. 

## Funding Of Nhm

The allocation for NHM in 2018-19 (Rs 30,130 crore) saw a 2% decrease over the revised estimates of 2017-18.  

NHM's percentage share in the total budget has 
decreased from 73% in 2006-07 to 55% in 2018-
19.  This may be on account of increased 
devolution of resources to states following the 
recommendations of the 14th Finance Commission.  
The break up between central and state funding for 

NHM can be seen in Table 5 for the period between 2014 to 2017. 

Corresponding 
Year 
state share 
Total 
outlay 
Central 
Revised       
Estimate 
2014-15 
17,628 
5,167 
22,795 
2015-16 
18,295 
9,952 
28,247 
2016–17 
20,000 
10,103 
30,103 
2017–18* 
21,941 
12,084 
34,025 

Source: Unstarred Question No. 1080, Ministry of Health and Family Welfare, Lok Sabha, July 21, 2017. 

*For 2017-18, outlay is as per Budget Estimate The funding for NHM is done through flexible pools, such as NRHM-RCH flexible pool, and flexible pool for communicable diseases.  The rationale for creating of the flexible pool is to allow more financial flexibility and efficient distribution of funds in order to obtain desired health outcomes. Note that in 2018-19, among all the flexible pools, the pool of funds for non-communicable diseases has increased by 5% at Rs 1,005 crore.  The allocation for the funding pool for communicable diseases and immunisation has decreased by 27% and 30% respectively.  Between 2004-06 and 2010- 13, the percentage of deaths caused by communicable diseases (27.7%) has seen the biggest decrease out of all the other causes of death.  These diseases include fever, diarrhoea, and acute respiratory infection.  On the other hand, the percentage of deaths due to non-communicable diseases (49.2%) has risen.244  These diseases include cardiovascular diseases, cancer, diabetes, and hypertension. The Standing Committee highlighted that in view of the increasing burden of non-communicable diseases in the country, fund constraint should not be the reason for increase in disease burden.246  Note that the challenge of noncommunicable diseases typically arises following the elimination of communicable diseases.  Noncommunicable diseases are closely associated to lifestyle changes, and require large investments for both promotive and curative health.245 

## State Level Spending

Following the 14th Finance Commission recommendations, there has been an increase in the states' share in the central pool of taxes from 32% 
to 42% in 2015-16.  In addition, the fund sharing pattern of some schemes was altered to reduce the central government share.  This was done to give states greater autonomy and flexibility to spend according to their priorities. It was noted in 2017 that despite the enhanced share in central taxes, all states have not increased their health budgets commensurately in 2016-17 and expenditure in sectors like health are higher in more developed states (See Annexure for more details).246,247  In fact, some of the state health 

budgets for 2016-17 have declined as compared to 
2015-16.  For example, Assam (-7%), Chandigarh 
(-3%), Daman & Diu (- 15%), and Karnataka (-
2%).246  

India faces a challenge to control communicable 
diseases even as it seeks to shift attention towards 
an increasing threat from non-communicable 
diseases.  This challenge varies across states as 
richer states have a higher incidence of non-
communicable diseases (such as hypertension and 
diabetes).  For example, a report by the 14th 
Finance Commission noted that the comparatively 
better developed states like Kerala and Tamil Nadu 
have better health outcomes in comparison to other 
states.245  However, these states also face a health 
crisis of another kind.  This leads to an additional 
financial burden for tackling non-communicable 
diseases.   

Further, differences in the cost of delivery of health 
services in several states, have contributed to health 
disparities among and within states.    

## Release And Utilisation Of Funds

The release of funds under NHM has often been 
delayed.  For example, out of the total funds of Rs 
8,242 crore released in 2016 under the reproductive 
and child healthcare, and the health systems 
strengthening components of NHM, Rs 7,460 crore 
were transferred with a delay.248    

Despite delay in release of funds, effective 
utilisation of funds has occurred in the case of 
NHM where fund releases have been around 98%.  
The Standing Committee observed that timeliness 
of transfer of funds is important as delayed 
transfers hamper fund utilisation.  In this regard, 
the existing fund release mechanism for NHM 
needs to be reviewed for better transfer of funds.248  

## Implementation

| Targets (2012-17)             | Status (as on March, 2017)    |
|-------------------------------|-------------------------------|
| Reduce IMR to 25              | IMR has reduced to 37 in      |
| 2015.                         |                               |
| Reduce MMR to                 |                               |
| 100/1,00,000 live births      |                               |
| MMR has reduced to 167 in     |                               |
| 2011-13.                      |                               |
| Reduce TFR to 2.1             | TFR has reduced to 2.3 in     |
| 2014.                         |                               |
| Annual Malaria Incidence      |                               |
| to be < .001                  |                               |
| Annual Malaria Incidence      |                               |
| is 0.67 in 2016.              |                               |
| Less than 1 % microfilaria    |                               |
| prevalence in all districts   |                               |
| Out of 256 endemic districts, |                               |
| 222 have reported incidence   |                               |
| less than 1% till 2016.       |                               |
| Kala-Azar  elimination by     |                               |
| 2015, <1 case per 10,000      |                               |
| population in all blocks      |                               |
| Out of 628 endemic blocks,    |                               |
| 492 (78%) have achieved       |                               |
| elimination till 2016.        |                               |

Source:  Unstarred Question No. 2667, Ministry of Health and 
Family Welfare, Lok Sabha, March 17, 2017; PRS. 
Note: IMR-Infant Mortality Rate; MMR-Maternal Mortality 
Rate; TFR-Total Fertility Rate. 

## Healthcare Infrastructure

Depending on the level of care required, health institutions in India are broadly classified into three types.  This classification includes primary care 
(provided at primary health centres), secondary care (provided at district hospitals), and tertiary care institutions (provided at specialised hospitals like AIIMS).  Primary health care infrastructure provides the first level of contact between health professionals and the population. 249  The HLEG (2011) observed that focus on prevention and early management of health problems can reduce the need for complicated specialist care provided at the tertiary level.240  It recommended that the focus of healthcare provision in the country should be towards providing primary health care.240 Broadly, based on the population served and the type of services provided, primary health infrastructure in rural areas consists of a three tier system.  This includes Sub-Centres (SCs), Primary Health Centres (PHCs), and Community Health Centres (CHCs).250  A similar set up is maintained in urban areas.251  The number of SCs, PHCs, and CHCs in 2005 and 2016 respectively are given in Figure 5.   
As of 2015, there are 20,306 government hospitals (including community health centres) in India, of which 82.8% are rural hospitals and 17.2% are urban hospitals.252  Table 7 contains the norms, status, and shortfall in rural SCs, PHCs and CHCs (between 2010-14).  A shortfall has been observed at different levels of the healthcare delivery system. As of 2016, there is a shortage of 20% in SCs, 22% in PHCs, and 30% in CHCs.250  It has also been noted that the existing ones are also poorly equipped and have inadequate infrastructure with many PHC's functioning in erstwhile single room SCs and many SCs in thatched accommodation.253   

Required 
% shortfall 
Type of Infrastructure 
number 
Status 
(As on 
2015) 
Sub-Centre 
1,79,240 
1,55,069 
20% 
Primary Health Centre 
29,337 
25,354 
22% 
Community Health Centre 
7,322 
5,510 
30% 

Sources: Rural Health Statistics 2016, Ministry of Health and Family Welfare, and Rural Health Infrastructure, Ministry of Statistics and Programme Implementation; PRS.  

Note that under NRHM, states were permitted to 
establish facilities as per need. However, not many 
states did so due to lack of funds and the inability 
to close down even existing facilities (not in use) 
due to administrative bottlenecks.253   

The Standing Committee on Health and Family 
Welfare observed that the proposal to transform 
1,50,000 Health Sub-Centres into Health and 
Wellness Centres (as announced in the budget 
speech 2017-18) has not been implemented and has 
no "solid roadmap" as of now.254 

With regard to secondary and tertiary care, the 
HLEG (2011) recommended that in order to 
guarantee secondary and tertiary care, equitable 
access to functional beds must also be provided.240 

According to the World Health Statistics, India 
ranks among the lowest in this regard, with 0.9 
beds per 1000, far below the global average of 2.9 
beds.  It recommended functional bed capacity 
should be expanded to 2 beds per 1000 population 
by 2022.240   

## Pradhan Mantri Swasthya Suraksha Yojana

Pradhan Mantri Swasthya Suraksha Yojana 
(PMSSY) has been implemented since 2003 with 
objectives of: (i) correcting regional imbalances in 
the availability of affordable and reliable tertiary 
healthcare services, and (ii) to augment facilities 
for quality medical education in the country.  This 
includes establishing AIIMS like institutions and 
upgrading certain state government hospitals.   

Six AIIMS from Phase I of the scheme are still 
underway and are at various stages of their 
completion and it would take some time to make 
them fully functional.  The Standing Committee on 
Health and Family Welfare (2017) noted that this 
indicates poor assessment of time and cost which 
have left the allocated funds unused.246 

Notes:  Values for 2017-18 and 2018-19 are revised estimates and budget estimates respectively  
Sources: Union Budget 2008-09 to 2018-19; PRS. In 2018-19, the allocation to PMSSY increased by 20% over the revised estimates of 2017-18 (see Figure 6) at Rs 3,825 crore.  Note that the Budget Speech for 2018-19 mentioned that 24 new government medical colleges and hospitals will be set up by upgrading existing district hospitals.236 
Regulation of private health services As per the National Sample Survey 2015, most hospitalisation cases were seen in private hospitals (68% in urban and 58% in rural areas).255  Further, in case of hospitalised, the cost of treatment (excluding childbirth) was four times higher in private hospitals (Rs 25,850) as compared to that in public hospitals (Rs 6,120).255 The HLEG observed that regulatory standards for public and private hospitals are not adequately defined and are poorly enforced.  Further, the quality of healthcare services varies considerably in the public and private sector.256  It has also been observed that many practitioners in the private sector are not qualified doctors.256 The 14th Finance Commission study group observed that the unregulated nature of the private sector is one of the issues leading to the high financial burden on households (which is not commensurate with the quality of care).257  It recommended that a policy measure must be taken to regulate the private healthcare sector. 

## Human Resources In Health

Between 2008 and 2016, the number of registered doctors increased from 7,61,429 to 10,05,281 (32% increase).258  Note that despite the increase, there has been a steady increase in the shortfall of doctors, specialists and surgeons.  For example, as of 2015, there is a shortfall of 83.4% of surgeons, 76.3% of obstetricians and gynaecologists, 83.0% of physicians and 82.1% of paediatricians.252  Table 8 shows the number of health professionals in India.  Refer to the Annexure for the shortfall (in percentage) of doctors at PHCs and nursing staff at CHCs and PHCs across various states as of 2016. 

Average 
Profession 
Number of 
professionals 
population 
served per 
professional  
Allopathic Doctors 
1,13,328 
11,097 
AYUSH Doctors** 
7,71,468 
1,630 
Nurses and Pharmacists 
35,19,796 
357 

Notes: **includes Ayurveda, Unani, Siddha, Naturopathy, and Homeopathy. Source: Human Resources in Health Sector, National Health Profile, 2017, Ministry of Health and Family Welfare, PRS. 

Issues concerning medical practice 

Certain reasons identified for the shortage of 
personnel in government facilities include: (i) poor 
working environment, (ii) poor remuneration 
making migration to foreign countries and to the 
private sector more attractive, and (iii) procedural 
delays in recruitment and poor forward planning 
for timely filling up of positions.  It has been 
estimated that filling up human resource gaps in 16 
states, would require an outlay equivalent to 0.6% 
to GDP.240  

With regard to health professionals, the HLEG 
(2011) recommended that adequate number of 
trained healthcare providers and workers must be 
ensured at different levels of the health system.240     

Issues concerning medical education 

Expert committees have examined issues related to 
medical education in India.  Certain key 
observations and recommendations include:259,260  

i. 
Focus on infrastructure over education 
quality: Major focus on maintenance of 
quality in medical education only in terms of fulfilling infrastructural requirements which has meant inadequate evaluation of the other 
standards of medical education. 
ii. 
Post-graduation qualification:  Presently, 
there are two systems of post graduate certification, namely Diplomate of National 
Board and MD/MS (master's degree).  The 
Parliamentary Standing Committee recommended that the current system of postgraduate admission must be integrated into 
one national qualification.  
iii. 
'For- profit' organisations to establish 
medical colleges:  Currently, only 'not-forprofit' organisations are permitted to establish 
medical colleges.  It has been observed that many private institutions of higher education charge exorbitant fees.  In the absence of welldefined norms, fees charged by such universities have remained high.261  In 2002, 

the Supreme Court ruled that the fees charged 
by private unaided educational institutes could 
be regulated.262  Also, while banning capitation 
fee (fees exceeding the tuition fee), it allowed 
institutes to charge a reasonable surplus.  NITI 
Aayog recommended that the sector should be 
opened to 'for-profit' organisations as well to 
address the supply gaps in medical 
education.259   

iv. 
Accreditation:  The Medical Council of India 
(MCI) is entrusted with the responsibility of establishing as well as ensuring the quality of medical institutions.  Committees have observed that these functions of the MCI may lead to a conflict of interest.  Therefore, an independent and autonomous accreditation body must be set up which will be responsible for ensuring the quality of education. 

## The National Medical Commission Bill, 2017

A legislation regarding the medical regulatory 
authority is pending in Parliament which shall 
oversee medical education and practice.  The 
National Medical Commission Bill, 2017 was 
introduced in Lok Sabha on December 29, 2017.  
The Bill seeks to repeal the Indian Medical 
Council Act, 1956 and dissolve the current 
Medical Council of India (MCI).  The MCI was 
established under the 1956 Act to establish 
uniform standards of medical education and 
regulate its practice. 

The Bill seeks to provide for a medical 
education system which ensures: (i) availability 
of adequate and high quality medical 
professionals, (ii) adoption of the latest medical 
research by medical professionals, (iii) periodic 
assessment of medical institutions, and (iv) an 
effective grievance redressal mechanism. 

## Health Research

The Standing Committee on Health and Family Welfare noted that there is a huge, persistent, and recurring mismatch between the projected demand for funds and actual allocation to the Department of Health Research.263  In 2018-19, its allocation has seen an increase of 3% over the revised estimates of 2017-18 at Rs 1,800 crore.  The Committee also noted that the Department had reported underutilisation of funds and on the other hand, the Department had also given an enhanced amount as its requirement for the next financial year.263 This mismatch between the demanded and allocated funds has led to impact in terms of restrictions in the sanctioning of new labs, providing recurring grants to the ongoing projects, and upgradation of health research infrastructure.263 This also led to repercussions in the medical research output.  For example, in two years i.e. 

2015 and 2016, only 1,685 research papers have 
been published by the Indian Council of Medical 
Research and 3 patents have been granted against 
the 45 patents filed.263   

## Drug Regulation

The central and state agencies for drug regulation 
are governed by the Drugs and Cosmetics Act, 
1940 (DCA).  The DCA provides for the regulation 
of import, manufacture, sale, and distribution of 
drugs.  Although the DCA is a central legislation, it 
is implemented by the states. 

Over the years, various Committees have examined 
the issues relating to the regulation of drugs.   

The Mashelkar Committee Report (2003) 
highlighted the following challenges of the drug 
regulatory system: (i) inadequacy of trained and 
skilled personnel at the central and state levels, (ii) 
lack of uniformity in the implementation of 
regulatory requirements and variations in 
regulatory enforcement, and (iii) inadequate or 
weak drug control infrastructure at the state and 
central level.264 

Expert committees have recommended many steps 
to address these concerns regarding drug regulation 
in the country.264,265,266   They include: (i) a new 
independent and professionally run regulatory 
body, Central Drug Administration reporting 
directly to MoHFW, (ii) categorising the states in 
terms of scale of industry (manufacturing and sale) 
and investment in their regulation accordingly, (iii) 
the revision and imposition of higher fees for drug 
applications, clinical trials, and registration of 
imported drugs and foreign manufacturers, and (iv) 
establishment of technical expert committees for 
new drug approvals.  

## Quality Of Drugs

The Parliamentary Standing Committee Report 
(2013) found that the prevalence of poor quality 
drugs to be around 7-8 % where non-standard drugs 
outnumber spurious drugs.267 

'spurious' drugs (2013-2015) 
Samples declared 
Year 
Samples 
not of standard 
tested 
quality 
Samples declared 
spurious 
2013-14 
72,717 
4.16% 
0.16% 
2014-15 
74,199 
4.98% 
0.11% 
2015-16 
74,586 
4.96% 
0.31% 

Source: Unstarred Question No. 719, Ministry of Health and 
Family Welfare, Lok Sabha, Answered on February 7, 2017; 
PRS.  Note: 'Standard quality' means that a drug which 
complies with the standards set out in the Second Schedule of 
the DCA; A drug shall be deemed to be 'spurious' if:  (i) it is 
manufactured under a name which belongs to another drug, (ii) 
if it is an imitation of another drug, (iii) if it has been substituted 
wholly or partly by another drug, and (iv) if it wrongly claims to 
be the product of another manufacturer.268 
 

The extent of 'non-standard quality' drugs in a country wide survey between 2013 and 2015 has been in the range of 4.16% and 4.98% (see Table 9).269  The extent of 'spurious' drugs during the same time period has been in the range of 0.11% to 
0.31% (see Table 9).269 With regard to quality of drugs, the Mashelkar Committee recommended that: (i) states should take more samples to check the quality of drugs manufactured and sold in the market, (ii) states should also monitor the source of purchase and quality of drugs stocked by registered medical practitioners, and (iii) number of drug inspectors and their skills must be upgraded according to the load of work of inspections and monitoring.264 It was also observed that lower number of cases were decided as compared to the number of cases which were being filed with regard to low quality of drugs.  Table 10 provides details on the number of prosecutions and cases decided related to spurious drugs.   
Welfare, Union Budget 2018-19, http://www.indiabudget.gov.in/ub2018-19/eb/sbe42.pdf; http://www.indiabudget.gov.in/ub2018-19/eb/sbe43.pdf. 229 Economic Survey, 2015-16, Ministry of Finance, http://indiabudget.nic.in/budget2016-2017/es2014-15/echaptervol1.pdf.  
230 Economic Survey, 2016-17, Ministry of Finance, http://indiabudget.nic.in/es2016-17/echapter.pdf. 231 National Health Policy, 2017, Ministry of Health and Family Welfare, March 16, 2017, http://mohfw.nic.in/showfile.php?lid=4275. 232 National Health Accounts, estimates for 2013-14 Ministry of Health and Family Welfare, http://www.mohfw.nic.in/sites/default/files/8949831122147141 6058.pdf. 233 Unstarred question no. 2201, Ministry of Health and Family Welfare, Lok Sabha, Answered on July 29, 2016, http://164.100.47.190/loksabhaquestions/annex/9/AU2201.pdf. 234 Unstarred Question No. 5019, Ministry of Health and Family Welfare, Lok Sabha, answered on March 31, 2017, http://164.100.47.190/loksabhaquestions/annex/11/AU5019.pdf. 235 Household Health Expenditures in India (2013-14), December 2016, Ministry of Health and Family Welfare, http://www.mohfw.nic.in/sites/default/files/3830041175148956 2625.pdf. 236 Budget Speech, 2018-19, http://www.indiabudget.gov.in/ub2018-19/bs/bs.pdf. 

Table 10:  Number of prosecutions and cases decided in cases of spurious drugs 
Year 
No. of cases 
No. of cases 
decided 
2012-13 
214 
6 
2013-14 
237 
44 
2014-15 
152 
10 

Source: Unstarred Question No. 640, Lok Sabha, Ministry of Health and Family Welfare, Answered on February 26, 2016; 
PRS. 

## Drug Pricing

The National Pharmaceutical Pricing Authority 
(NPPA) monitors the availability and pricing of 
drugs in the country.  NPPA fixes the prices of 
drugs/devices included in Schedule I of Drugs 
(Prices Control) Order (DPCO), 2013 after their 
notification under National List of Essential 
Medicines (NLEM).  NLEM, 2015 consists of 375 
medicines in total (this includes 23 medical 
devices).  Wherever instances of manufacturers/ 
importers charging prices higher than the prices 
fixed by the NPPA are reported, these cases are 
examined in detail.  Since the inception of NPPA in 
1997 till 2012, 1,664 demand notices have been 
issued to pharmaceutical companies for having 
overcharged patients on the sale of formulations at 
prices above the ceiling prices notified by NPPA.270  
Demand notices have been issued for an amount of 
Rs 5,778 crore and an amount of Rs 3,454 crore is 
under litigation.271 

238 "Chapter three, Summary of Findings, Key Indicators of Social Consumption in India in Health", 71st Round, National Sample Survey (NSS), Ministry of Statistics and Programme, http://mail.mospi.gov.in/index.php/catalog/161. 239  "Rashtriya Swasthya Bima Yojana", Last accessed on March 8, 2016, http://www.rsby.gov.in/about_rsby.aspx. 240 "High Level Expert Group Report on Universal Health 
Coverage for India", Planning Commission of India, November 
2011, http://planningcommission.gov.in/reports/genrep/rep_uhc0812.p df.   
241  "Health expenditure per capita (US $)", World Health Organisation, http://data.worldbank.org/indicator/SH.XPD.PCAP. 242  National Health Profile, 2016, Ministry of Health and Family Welfare, http://www.cbhidghs.nic.in/E-Book%20HTML- 2016/index.html. 

243 
"Essential Health  Package for India:  Approach and  Costing", 
Institute of Economic Growth, Finance Commission, 
http://fincomindia.nic.in/writereaddata/html_en_files/fincom14/
others/40.pdf.  

244 Causes of death, 2010-13, Office of the Registrar General & 
Census Commissioner, 
http://www.censusindia.gov.in/vital_statistics/causesofdeath.htm
l. 

245 "Inter-State Comparisons on Health Outcomes in Major 
States and a Framework for Resource Devolution for Health", 
Centre for Economic & Social Studies, Hyderabad, 14th Finance 
Commission, 
http://fincomindia.nic.in/writereaddata/html_en_files/fincom14/
others/39.pdf. 

246 "Report no. 99, Demands for Grants 2016-17 (Demand No. 
42) of the Department of Health and Family Welfare", Standing 

                                                                                                                                                                                     
251 Framework for Implementation, National Urban Health Mission ,May, 2013, http://nrhm.gov.in/images/pdf/NUHM/Implementation_Framework_NUHM.pdf. 252 Health and Family Welfare Statistics in India 2015, Ministry of Health and Family Welfare, October 2015, https://nrhmmis.nic.in/Pub_FW_Statistics2015/Complete%20Book.pdf. 253 "Survey Report & Recommendations of Clinical Establishments", Ministry of Health and Family Welfare, 2013, http://clinicalestablishments.nic.in/WriteReadData/788.pdf. 254 "Report no.99: Demands for Grants 2017-18 (Demand No.42) of the Department of Health and Family Welfare", Standing Committee on Health and Family Welfare, Rajya Sabha, March 20, 2017, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20Health%20and%20Family%20Welfare/99.pdf. 255 "Chapter three, Summary of Findings, Key Indicators of Social Consumption in India in Health", 71st Round, National Sample Survey (NSS), Ministry of Statistics and Programme Implementation, June 2015, http://mospi.nic.in/Mospi_New/upload/nss_71st_ki_health_30june15.pdf. 256 "Chapter: 20, Health, Twelfth Five Year Plan (2012-17)", Planning Commission of India, http://planningcommission.gov.in/plans/planrel/12thplan/pdf/12fyp_vol3.pdf. 257 "Essential Health Package for India Approach and Costing", Report submitted to the 14th Finance Commission, Ministry of Finance, September 2014, http://fincomindia.nic.in/writereaddata%5Chtml_en_files%5Cfincom14/others/40.pdf. 258  National Health Profile, 2017, Ministry of Health and Family Welfare, http://cbhidghs.nic.in/E-Book%20HTML-2017%20PART- I/files/assets/basic-html/page-1.html. 259 "A Preliminary Report of the Committee on the Reform of the Indian Medical Council Act, 1956", NITI Aayog, August 7, 2016, http://niti.gov.in/writereaddata/files/document_publication/MCI%20Report%20.pdf. 260 "Report no. 92 on 'Functioning of the Medical Council of India'", Standing Committee on Health and Family Welfare, March 8, 2016, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20Health%20and%20Family%20Welfare/92.pdf Bill, 2010", Standing Committee on Human Resource Development, May 30, 2011, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20HRD/236.pdf. 

Drugs", Ministry of Health and Family Welfare, November, 2003, 

Major Heads 
2016-17 
Actuals 
2017-18 BE 
2017-18 RE 
2018-19 BE 
Department of Health Research 
1,324 
1,500 
1,743 
1,800 
32% 
3% 
Department of Health and Family Welfare 
37,671 
47,353 
51,551 
52,800 
37% 
2% 
Pradhan Mantri Swasthya Suraksha Yojana 
1,953 
3,975 
3,175 
3,825 
63% 
20% 
Family Welfare Schemes 
575 
755 
788 
770 
37% 
-2% 
National AIDS and STD Control Programme 
1,749 
2,000 
2,163 
2,100 
24% 
-3% 
National Health Mission 
22,454 
26,691 
30,802 
30,130 
37% 
-2% 
-National Rural Health Mission  
19,826 
21,189 
25,459 
24,280 
28% 
-5% 
-National Urban Health Mission 
491 
752 
652 
875 
33% 
34% 
-National Mental Health Programme  
34 
35 
45 
50 
32% 
11% 
1,497 
4,025 
4,025 
4,225 
169% 
5% 
-Human Resources for Health and Medical Education Infrastructure Development for Health Research 
76 
104 
127 
138 
67% 
9% 
Rashtriya Swasthya Bima Yojna 
466 
1,000 
471 
2,000 
1% 
325% 
Autonomous Bodies 
5,467 
6,088 
6,971 
6,900 
28% 
-1% 
Others 
6,254 
8,240 
8,799 
8,737 
41% 
-1% 
Total 
38,995 
48,853 
53,294 
54,600 
37% 
2% 

Sources:  Demand for Grants, Ministry of Health and Family Welfare, Union Budget, 2018-19; PRS. 

State-wise and global numbers on the health sector 

State 
Average health expenditure 
(rural) 
Andhra Pradesh 
         13,227  
         31,242  
Arunachal Pradesh 
           5,678  
           8,926  
Assam 
           6,966  
         47,064  
Bihar 
         11,432  
         25,004  
Chhattisgarh 
         12,149  
         22,647  
Delhi 
         30,613  
         34,730  
Goa 
         29,954  
         23,165  
Gujarat 
         14,298  
         20,155  
Haryana 
         18,341  
         32,370  
Himachal Pradesh 
         18,860  
         28,590  
Jammu & Kashmir 
           8,442  
         13,948  
Jharkhand 
         10,351  
         13,151  
Karnataka 
         14,091  
         22,190  
Kerala 
         17,642  
         15,465  
Madhya Pradesh 
         13,090  
         23,993  
Maharashtra 
         20,475  
         29,493  
Manipur 
           6,061  
         10,215  
Meghalaya 
           2,075  
         18,786  
| % Change RE                |
|----------------------------|
| (2017-                     |
| 18)/Actuals                |
| (2016-17)                  |
| between RE                 |
| 2017-18  and               |
| BE 2018-19                 |
| Average health expenditure |
| (urban)                    |
| Mizoram                   |            8,744     |          13,461     |
|---------------------------|----------------------|---------------------|
| Nagaland                  | 5,628                | 15,788              |
| Odisha                    | 10,240               | 19,750              |
| Punjab                    | 27,718               | 29,971              |
| Rajasthan                 | 12,855               | 16,731              |
| Sikkim                    | 8,035                | 9,939               |
| Tamil Nadu                | 11,842               | 23,757              |
| Telangana                 | 19,664               | 20,617              |
| Tripura                   | 5,694                | 11,638              |
| Uttar Pradesh             | 18,693               | 31,653              |
| Uttarakhand               | 9,162                | 25,703              |
| West Bengal               | 11,327               | 24,875              |
| Andaman & Nicobar Islands | 3,373                | 8,389               |
| Chandigarh                | 16,389               | 35,158              |
| Dadra & Nagar Haveli      | 4,219                | 7,749               |
| Daman & Diu               | 10,223               | 6,930               |
| Lakshadweep               | 10,418               | 8,604               |
| Puducherry                | 7,965                | 14,076              |
| All India                 | 14,935               | 24,436              |

Sources: District Level Household and Facility Survey -4 (2012-13); PRS. 

| State                       | Doctors at PHCs    |
|-----------------------------|--------------------|
| Nursing staff at PHCs       |                    |
| and CHCS                    |                    |
| Andhra Pradesh              | **                 |
| Arunachal Pradesh           | 15%                |
| Assam                       | 8%                 |
| Bihar                       | 1%                 |
| Chhattisgarh                | 56%                |
| Goa                         | **                 |
| Gujarat                     | 16%                |
| Haryana                     | **                 |
| Himachal Pradesh            | 18%                |
| Jammu and Kashmir           | **                 |
| Jharkhand                   | 17%                |
| Karnataka                   | 9%                 |
| Kerala                      | **                 |
| Madhya Pradesh              | 19%                |
| Maharashtra                 | **                 |
| Manipur                     | **                 |
| Meghalaya                   | 4%                 |
| Mizoram                     | **                 |
| Nagaland                    | 5%                 |
| Odisha                      | 27%                |
| Punjab                      | **                 |
| Rajasthan                   | **                 |
| Sikkim                      | **                 |
| Tamil Nadu                  | **                 |
| Tripura                     | **                 |
| Uttarakhand                 | 16%                |
| Uttar Pradesh               | 36%                |
| West Bengal                 | 21%                |
| Andaman and Nicobar Islands | **                 |
| Chandigarh                  | 33%                |
| Dadra and Nagar Haveli      | 0%                 |
| Daman and Diu               | **                 |
| Delhi                       | **                 |
| Lakshadweep                 | **                 |
| Puducherry                  | **                 |
| All India                   | 13%                |

Source:  Rural Health Statistics 2015, Ministry of Health and Family Welfare; PRS. Note: Norm for nursing staff:  One per Primary Health Centre and seven per Community Health Centre; for doctors:  One allopathic doctor per Primary Health Centre; ** : surplus human resources exceeding the norms.  

| % of                                           | Reasons for not generally using government health facilities among households which do    |
|------------------------------------------------|-------------------------------------------------------------------------------------------|
| not generally use government health facilities | households                                                                                |
| that do not                                    |                                                                                           |
| State                                          |                                                                                           |
| Facility                                       | Health                                                                                    |
| No nearby                                      | Waiting time                                                                              |
| generally use                                  |                                                                                           |
| government                                     |                                                                                           |
| facility                                       | too long                                                                                  |
| Other                                          |                                                                                           |
| reason                                         |                                                                                           |
| timing not                                     |                                                                                           |
| convenient                                     |                                                                                           |
| personnel                                      |                                                                                           |
| often absent                                   |                                                                                           |
| health                                         |                                                                                           |
| facilities                                     |                                                                                           |
| 74.3                                           | 49.2                                                                                      |
| Pradesh                                        |                                                                                           |
| Assam                                          | 34.8                                                                                      |
| Bihar                                          | 93.3                                                                                      |
| Chhattisgarh                                   | 63.7                                                                                      |
| Gujarat                                        | 72.5                                                                                      |
| Haryana                                        | 72.3                                                                                      |
| Jharkhand                                      | 77.7                                                                                      |
| Karnataka                                      | 64.0                                                                                      |
| Kerala                                         | 50.0                                                                                      |
| 62.6                                           | 50.8                                                                                      |
| Pradesh                                        |                                                                                           |
| Maharashtra                                    | 70.3                                                                                      |
| Odisha                                         | 24.0                                                                                      |
| Punjab                                         | 80.8                                                                                      |
| Rajasthan                                      | 29.8                                                                                      |
| Tamil Nadu                                     | 47.0                                                                                      |
| Uttar Pradesh                                  | 84.7                                                                                      |
| West Bengal                                    | 71.2                                                                                      |
| 17.5                                           | 50.1                                                                                      |
| Pradesh                                        |                                                                                           |
| Delhi                                          | 70.7                                                                                      |
| Goa                                            | 70.4                                                                                      |
| 17.3                                           | 34.1                                                                                      |
| Pradesh                                        |                                                                                           |
| 37.1                                           | 33.2                                                                                      |
| Kashmir                                        |                                                                                           |
| Manipur                                        | 21.0                                                                                      |
| Meghalaya                                      | 35.2                                                                                      |
| Mizoram                                        | 9.4                                                                                       |
| Nagaland                                       | 47.9                                                                                      |
| Sikkim                                         | 8.2                                                                                       |
| Tripura                                        | 20.1                                                                                      |
| Uttarakhand                                    | 55.6                                                                                      |
| All India                                      | 65.6                                                                                      |

Sources: District Level Household and Facility Survey -4 (2012-13); PRS. 

| Country      | Population    | Infant    |   Life  |
|--------------|---------------|-----------|---------|
| (Million)    |               |           |         |
| Crude Birth  |               |           |         |
| Rate 2013    |               |           |         |
| Total        |               |           |         |
| Fertility    |               |           |         |
| Underweight  |               |           |         |
| children (%) | Expectancy    |           |         |
| Maternal     |               |           |         |
| Mortality    |               |           |         |
| 2013         | Rate, 2013    |           |         |
| Under 5      |               |           |         |
| mortality    |               |           |         |
| rate, 2013   | (2009-13)     | Ratio     |         |
| (MMR) 2015   |               |           |         |
| at Birth     |               |           |         |
| (Years)      |               |           |         |
| 2013         | $             |           |         |
| Mortality    |               |           |         |
| Rate (per    |               |           |         |
| 1000 live    |               |           |         |
| Births)      |               |           |         |
| 2013         |               |           |         |
| India        | 1252.1        | 20.0      |     2.5 |
| Afghanistan  | 30.6          | 34        |     4.9 |
| Bangladesh   | 156.6         | 20        |     2.2 |
| China        | 1385.6        | 13        |     1.7 |
| North Korea  | 24.9          | 14        |     2   |
| Indonesia    | 249.9         | 19        |     2.3 |
| Iran         | 77.4          | 19        |     1.9 |
| Japan        | 127.1         | 8         |     1.4 |
| Malaysia     | 29.7          | 18        |     2   |
|              |               |           |         |
Myanmar 
53.3 
17 
1.9 
51 
40 
23 
65 
178 
Nepal 
27.8 
21 
2.3 
40 
32 
29 
68 
258 
Pakistan 
182.1 
25 
3.2 
86 
69 
32 
67 
178 
Philippines 
98.4 
24 
3.0 
30 
24 
20 
69 
114 
South Korea 
49.3 
10 
1.3 
4 
3 
1 
82 
11 
Singapore 
5.4 
10 
1.3 
3 
2 
3 
82 
10 
Sri Lanka 
21.3 
18 
2.3 
10 
8 
26 
74 
30 
Thailand 
67.0 
10 
1.4 
13 
11 
9 
74 
20 
Vietnam 
91.7 
16 
1.7 
24 
19 
12 
76 
54 
Botswana 
2.0 
24 
2.6 
47 
36 
11 
48 
129 
Cambodia 
15.1 
26 
2.9 
38 
33 
29 
72 
161 
Congo 
4.4 
38 
5.0 
49 
36 
12 
59 
442 
Guatemala 
15.5 
31 
3.8 
31 
26 
13 
72 
88 
South Africa 
52.8 
21 
2.4 
44 
33 
9 
57 
138 
Zimbabwe 
14.2 
31 
3.5 
89 
55 
10 
60 
443 
Australia 
23.3 
13 
1.9 
4 
3 
- 
82 
6 
France 
64.3 
12 
2.0 
4 
4 
- 
82 
8 
Germany 
82.7 
8 
1.4 
4 
3 
1 
81 
6 
UK 
63.1 
12 
1.9 
5 
4 
- 
81 
9 
USA 
320.1 
13 
2.0 
7 
6 
1 
79 
14 

Sources: Health and Family Welfare Statistics, 2015 (Rural); PRS. 

| Parameter                                                          | NFHS 3 (2005-06)    | NFHS 4 (2015-16)    |
|--------------------------------------------------------------------|---------------------|---------------------|
| Total children age 6-23 months receiving an adequate diet          | n/a                 | 9.6%                |
| Children under 5 years who are stunted (low height-for-age)        | 48.0%               | 38.4%               |
| Children under 5 years who are wasted (weight-for-height)          | 19.8%               | 21.0%               |
| Children under 5 years who are severely wasted (weight-for-height) | 6.4%                | 7.5%                |
| Children under 5 years who are underweight (low weight-for-age)    | 42.5%               | 35.7%               |
| Children age 6-59 months who are anaemic                           | 69.4%               | 58.4%               |
| Children under age 3 years breastfed within one hour of birth      | 23.4%               | 41.6%               |
| Source: National Family Health Survey 3 & 4; PRS.                  |                     |                     |
| Parameter                                                          | NFHS 3 (2005-06)    | NFHS 4 (2015-16)    |
|--------------------------------------------------------------------|---------------------|---------------------|
| Women whose Body Mass Index (BMI) is below normal (BMI < 18.5 kg/m |                     |                     |
| 2                                                                  |                     |                     |
| )                                                                  | 35.5%               | 22.9%               |
| Men whose Body Mass Index (BMI) is below normal (BMI < 18.5 kg/ m  |                     |                     |
| 2                                                                  |                     |                     |
| )                                                                  | 34.2%               | 20.2%               |
| Women who are overweight or obese (BMI ≥ 25.0 kg/ m                |                     |                     |
| 2                                                                  |                     |                     |
| )                                                                  | 12.6%               | 20.7%               |
| Men who are overweight or obese (BMI ≥ 25.0 kg/ m                  |                     |                     |
| 2                                                                  |                     |                     |
| )                                                                  | 9.3%                | 18.6%               |

Source: National Family Health Survey 3 & 4; PRS. 

| State/UT                    | Stunted    | Wasted    |
|-----------------------------|------------|-----------|
| Under-                      |            |           |
| weight                      |            |           |
| Andaman and Nicobar Islands | 17.1%      | 19.1%     |
| Andhra Pradesh              | 28.3%      | 15.5%     |
| Arunachal Pradesh           | 24.0%      | 11.4%     |
| Assam                       | 22.3%      | 13.2%     |
| Bihar                       | 39.8%      | 21.3%     |
| Chandigarh                  | 27.6%      | 11.4%     |
| Chhattisgarh                | 31.6%      | 20.6%     |
| Delhi                       | 32.4%      | 17.2%     |
| Dadra and Nagar Haveli    | 35.8%    | 21.4%    | 27.4%    |
|---------------------------|----------|----------|----------|
| Daman and Diu             | 21.9%    | 23.8%    | 27.2%    |
| Goa                       | 18.3%    | 27.7%    | 25.3%    |
| Gujarat                   | 31.7%    | 23.4%    | 32.0%    |
| Haryana                   | 33.4%    | 21.0%    | 28.5%    |
| Himachal Pradesh          | 21.4%    | 19.1%    | 17.1%    |
| Jammu and Kashmir         | 23.0%    | 16.1%    | 17.0%    |
| Jharkhand                 | 33.7%    | 26.8%    | 39.3%    |
| Karnataka                 | 32.6%    | 24.8%    | 31.5%    |
| Kerala                    | 19.8%    | 16.0%    | 15.5%    |
| Lakshadweep               | 27.1%    | 13.2%    | 22.6%    |
| Madhya Pradesh            | 37.5%    | 22.0%    | 36.5%    |
| Maharashtra               | 29.3%    | 24.9%    | 30.7%    |
| Manipur                   | 24.1%    | 6.4%     | 13.1%    |
| Meghalaya                 | 36.5%    | 13.7%    | 22.9%    |
| Mizoram                   | 22.7%    | 4.5%     | 8.5%     |
| Nagaland                  | 22.5%    | 10.1%    | 13.6%    |
| Odisha                    | 27.2%    | 17.0%    | 26.2%    |
| Punjab                    | 27.6%    | 15.0%    | 22.4%    |
| Puducherry                | 24.7%    | 26.1%    | 23.3%    |
| Rajasthan                 | 33.0%    | 21.6%    | 30.7%    |
| Sikkim                    | 22.9%    | 13.2%    | 12.0%    |
| Tamil Nadu                | 25.5%    | 19.0%    | 21.5%    |
| Telangana                 | 20.9%    | 14.6%    | 22.2%    |
| Tripura                   | 17.2%    | 13.4%    | 21.7%    |
| Uttar Pradesh             | 37.9%    | 18.0%    | 33.7%    |
| Uttarakhand               | 32.5%    | 18.6%    | 25.6%    |
| West Bengal               | 28.5%    | 16.7%    | 26.2%    |
| India                     | 38.4%    | 21.0%    | 35.7%    |

injuries (for example, caused by suicide), and (iv)  symptoms, signs, and ill-defined conditions:  includes abnormal clinical findings Sources:  State Finances: A Study of Budgets, RBI; PRS. 

Note:  Figures of 2016-17 and 2015-16 are Budget Estimates and Revised Estimates respectively. 

## Demand For Grants 2018-19 Analysis Housing And Urban Affairs

The Ministry of Housing an d Urban Affairs plays a central role in formulating policies and coordinating the activities of various agencies (including state governments, and urban local bodies) involved in urban planning.  The Ministry of Housing and Poverty Alleviation and Ministry of Urban Development were combined in 2017 to form the Ministry of Housing and Urban Affairs. This note looks at the expenditure incurred by the Ministry, the status of the various schemes implemented, and the issues faced with investment required for urban planning.   

## Overview Of Finances

The total allocated expenditure for the Ministry of Housing and Urban Affairs for 2018-19 is Rs 41,765 crore, 2% higher than the revised estimate of 2017-18.272   
Note: For the years 2009-10 till 2017-18, the figures are a combination of the erstwhile Ministry of Housing and Urban Poverty Alleviation, and Ministry of Urban Development. Values for 2017-18 are revised estimates.   
Sources: Budget documents 2009-10 to 2018-19; PRS. The period from 2009-10 till 2017-18 has seen a trend of increase in actual expenditure.  The period saw a Compounded Annual Growth Rate (CAGR) of 25%.  CAGR is the annual growth rate over a certain period of time.  This may be due to an increased focus on infrastructure provision in urban areas.  The period from 2014-15 till 2017-18 has seen higher increases in expenditure.  The highest increase in expenditure was seen in 2014-15 (91%), over the previous year.  In 2016-17, there was an 83% rise in expenditure over the previous year. The figure below shows the trend in utilisation of funds between 2009-10 and 2017-18.   

Note: For the years 2009-10 till 2017-18, the figures are a 
combination of the erstwhile Ministry of Housing and Urban 
Poverty Alleviation, and Ministry of Urban Development.  
Values for 2017-18 are revised estimates. 
Sources: Budget documents 2009-10 to 2018-19; PRS. 

While the actual expenditure of the Ministry has 
been increasing over the years, for the period 
between 2011-12 and 2015-16, it was lower than 
the budget estimates.  Although 2014-15 saw the 
highest increase in expenditure, it also saw the 
largest negative deviation from the budget estimate.  
The actual expenditure in 2014-15 was 32% lower 
than the budget estimate.   

The Standing Committee on Urban Development, 
2017, noted that the budgetary allocations were 
lower than the Ministry demand.273  Although there 
was a 36% increase in the budget estimate for 
2017-18 over the budget estimate for 2016-17, it 
was short of what the Ministry had projected.  (The 
erstwhile Ministry of Urban Development had an 
allocation of Rs 34,212 crore as compared to the 
projected Rs 68,410 crore).273 

| Revised    | Budgeted    | %      |
|------------|-------------|--------|
|            |             |        |
| Actual     |             |        |
| 16-17      | 17-18       | 18-19  |
| Metro      | 15,327      | 18,000 |
| PMAY       |             |        |
| (Urban)    |             |        |
| 4,881      | 6,043       | 6,505  |
| AMRUT      | 4,864       | 4,999  |
| Smart      |             |        |
| Cities     |             |        |
| 4,412      | 4,000       | 6,169  |
| SBM        |             |        |
| (Urban)    |             |        |
| 2,135      | 2,300       | 2,500  |

Sources: Union Budget documents 2018-19; PRS.  
Of the expenditure allocated to the Ministry in 2018-19, the highest allocation is towards metro projects at 36% of the total (Rs 15,000 crore).  This is followed by allocations towards key schemes under the Ministry, i.e., Pradhan Mantri Awas Yojana (PMAY)- Urban (16%; Rs 6,505 crore), Smart Cities Mission (15%; Rs 6,169 crore), AMRUT (14%; Rs 6,000 crore), and Swachh Bharat Mission- Urban (6%; Rs 2,500 crore).   
Of the major schemes/projects, allocation towards Metro projects in 2018-19 has seen a 17% decrease over the revised estimates of 2017-18, and allocation towards Smart Cities has seen a 54% increase over the revised estimates.   
Sources: Ministry of Housing and Urban Affairs budget documents; PRS. 

## Revenue And Capital Expenditure

Table 2 shows the overall shift in revenue and capital expenditure of the Ministry.  

## Housing And Urban Affairs ( Rs Crore)

 
BE 2017- 18* 
RE 2017- 18* 
BE 2018- 19 
% change (BE 2018-19/ RE 2017-18)  
Revenue 
 21,285 
21,332 
25,350 
19% 
Capital 
 19,333 
 19,422 
16,415 
-15% 
Total 
40,618 
 40,754 
41,765 
2% 

Notes:  BE - Budget Estimate; RE - Revised Estimate. *Combines BE and RE of erstwhile Ministry of Housing and Poverty Alleviation, and Ministry of Urban Development. Sources:  Ministry of Housing and Urban Affairs budget documents; PRS.   
Of the total expenditure, 39% is allocated for capital expenditure, and 61% for revenue expenditure.  As compared to the revised estimates of 2017-18, revenue expenditure has increased by 19%, while capital expenditure has decreased by 15%.  The reduction in capital expenditure can be attributed to a reduction in the allocation towards Metro projects.  The capital expenditure on metro projects forms 91% of the total capital expenditure.   

## Major Schemes And Allocations: 2018-19 Metro Projects

The Ministry of Housing and Urban Affairs is responsible for urban transport which includes metro projects.   
The budgetary allocation towards metro projects in 2018-19 is Rs 15,000 crore.  This is a 17% decrease over the revised estimates of 2017-18. The table below shows the trends in allocations and expenditure towards metro projects.   

|         | Year     | Budgeted    | Actuals  % utilised    |
|---------|----------|-------------|------------------------|
| 2014-15 | 8,026    | 5,998       | 75%                    |
| 2015-16 | 8,260    | 9,300       | 113%                   |
| 2016-17 | 10,000   | 15,327      | 153%                   |
| 2017-18 | 18,000   | 18,000*     | 100%                   |

 
*Revised estimates. Sources: Budget documents 2015-16 to 2018-19; PRS.  

The allocation towards metro projects has been 
increasing from the period 2014-15 till 2017-18.  
The allocation in 2018-19 was decreased by 17% 
over the revised estimates of 2017-18.  As the 
allocations have been increasing, the actual 
expenditures have over shot the budget estimates.  
In 2016-17, the actual expenditure was 153% of the 
budget estimate.  In 2017-18 the revised estimate is 
the same as the budget estimate.   

## 

There are currently 13 ongoing metro rail projects 
that have been set up as a 50:50 joint venture 
between the central government and respective 
state governments.274  The total sanctioned costs of 
these projects amount to Rs 1,76,105 crore, of 
which the share of the central government is Rs 
30,903 crore.274  As of August 2017, a total length 
of 370 km are operational in eight cities, and a total 
length of 537 km are work in progress in 13 cities 
(including these eight cities).275   

Of the total expenditure on metro projects, majority 
of it (Rs 14,924 crore) is on capital expenditure.  
The capital expenditure on metro projects forms 
91% of the total capital expenditure of the Ministry 
of Housing and Urban Affairs.  The Standing 
Committee on Urban Development (2017) noted 
that a high allocation towards metro projects leads 
to inadequate funds for other projects.273  The 
Committee recognises the importance of metro 
projects for the improvement of urban transport, 
and has recommended financing projects through 
other options such as international cooperation.   

The Union Cabinet approved the Metro Rail Policy 
in August 2017.276  The policy makes a Public 
Private Partnership (PPP) component mandatory 
for a project to be eligible for central assistance.  In 
addition, states have three options via which they 
can avail central assistance.  These options are- (i) 
PPP with central assistance under the viability gap 
funding scheme of the Ministry of Finance, (ii) 
grant by government under which a lump sum 

central assistance will amount to 10% of the project cost, and (iii) 50:50 equity sharing model between state and central governments.   
Pradhan Mantri Awas Yojana (PMAY)- Urban  
PMAY- Urban is a housing scheme being implemented from 2015 to 2022.  The scheme comprises four components: (i) in situ rehabilitation of existing slum dwellers through private participation, (ii) credit linked subsidy scheme (CLSS) for economically weaker section (EWS), lower income group (LIG), and middle income group (MIG), (iii) affordable housing in partnership, and (iv) subsidy for beneficiary led individual house construction.  The Ministry provides central assistance to urban local bodies for the implementation of the scheme through respective state governments. The budgetary allocation towards the scheme for 2018-18 is Rs 6,505 crore.  This is an 8% increase over the revised estimates for 2017-18.  The increase in budgetary allocation in 2018-19 can be attributed to the increase in allocations for the LIG and MIG components of the CLSS.   

Table 52: Allocation towards PMAY ( Rs crore) 
Year  
Budgeted 
Actuals 
% utilised 
2015-16 
4,175 
1,487 
36% 
2016-17 
5,075 
4,881 
96% 
2017-18 
6,043 
6,043* 
100% 
2018-19 
6,505 

*Revised estimates. Sources: Budget documents 2015-16 to 2018-19; PRS.  
 In 2016-17, a 228% increase was observed in the actual expenditure over 2015-16.  Correspondingly, a 258% rise was seen in the number of houses constructed in 2016-17.   Table 5 shows the year on year increase in the number of houses constructed under the scheme.  Although the actual expenditure has seen an increase, it has been short of the budget estimates.  In 2015-16, 36% of the budget estimate was utilised, and in 2016-17, 96% of the budget estimate was utilised.   

Year on Year 
Year 
No. of 
houses 
increase 
completed 
2014-15 
2,506 
 
2015-16 
18,706 
646% 
2016-17 
66,985 
258% 
2017-18* 
2,07,794 
210% 

*Data for 2017-18 updated till January 2, 2018. Sources: Lok Sabha Unstarred Question no. 2528; PRS.   
Under the scheme, as on January 2, 2018, of the total 32,00,431 houses sanctioned for construction, 9% (2,95,991) houses have been completed.277 
The government aims to achieve its 'housing for all target' by 2022.  As per the 2011 census, 27.5% of urban residents lived in rented houses.  According to the Report of the Group of Secretaries, January 2017, a rental housing scheme would further complement PMAY- Urban in achieving the housing for all target.278   

Lending by housing finance companies- Both 
housing finance companies (HFCs), and public 
sector banks offer low cost funding for housing.  
HFCs have an 80% share in the implementation of 
CLSS component of PMAY-Urban.278  However, 
they face constraints such as inability to access 
long term funds. 

The Union Cabinet has approved the creation of a 
National Urban Housing Fund (NUHF) worth Rs 
60,000 crore.279  This fund will be under the 
Building Materials and Technology Promotion 
Council, an autonomous body set up in 1990 under 
the Ministry of Housing and Urban Affairs.  The 
council undertakes research to facilitate large scale 
application of new building material 
technologies.280  The NUHF aims to raise funds in 
the next four years to ensure a sustained flow of 
central release under Pradhan Mantri Awas Yojana 
(PMAY)-Urban, enabling construction of houses.   

Urban Rejuvenation Mission: AMRUT and Smart 
Cities Mission  

The AMRUT mission was launched in June 
2015.281  The purpose of the mission is to provide 
basic services (these services include water supply, 
sewerage, and urban transport) in cities, especially 
to the poorer households.   

The pace of urbanisation is increasing in the 
country.  The table below captures the rise in the 
number of towns.   

|                 | 2001    | 2011    | % increase    |
|-----------------|---------|---------|---------------|
| Statutory Towns | 3,799   | 4,041   | 6%            |
| Census Towns    | 1,362   | 3,894   | 186%          |

Sources: Ministry of Housing and Urban Affairs; PRS. 

The growth in urbanisation has seen a 186% rise in 
the number of census towns (towns that do not 
have a notified urban local body).  The absence of 
notified urban local bodies (ULBs) leads to 
unplanned growth of slums, lack of basic drinking 
water or sewerage facilities, and no tax collection 
as applicable to municipalities.    

In the context of the rapid rise in unplanned 
urbanization, the reforms under AMRUT intend to 
improve service delivery, and make municipal 
functioning more accountable.   

The budget estimate for 2018-19 is Rs 6,000 crore, 
20% more than the revised estimates of 2017-18.   

AMRUT is a Centrally Sponsored Scheme with a 
financial outlay of Rs 50,000 crore for five years 
(2015-20).  Capacity building and implementation 
of reforms are key components of the mission.  The 
following table compares the actual expenditure 
against the proposed allocation as given in a 
cabinet note, indicated by the Standing Committee 
on Urban Development, 2017.273  

actual expenditure ( Rs crore) 
| Year    | Proposed allocation    | Budgeted    | Actuals    |
|---------|------------------------|-------------|------------|
| 2015-16 | 5,000                  | 3,919       | 2,702      |
| 2016-17 | 15,000                 | 4,080       | 4,864      |
| 2017-18 | 15,000                 | 5,000       | 4,999*     |
| 2018-19 | 9,000                  | 6,000       | -          |
| 2019-20 | 6,000                  | -           | -          |
| Total   | 50,000                 | 18,999      | 12,565     |

*Revised Estimate. Sources: Standing Committee on Urban Development, 2017; Budget documents; PRS.   
As per the Cabinet note, the Ministry seeks to spend Rs 50,000 crore on AMRUT by 2019-20.  As per the government's proposal, the Ministry should have spent Rs 35,000 crore (70% of the total) by 2017-18.  So far, looking at the actual expenditure, the Ministry has spent Rs 12,565 crore (25.1% of the proposed total).  The government has to achieve 74.9% of the total target in 2018-19, and 2019-20. The allocation towards the scheme has been increasing over the period from 2015-16 till 2018- 19.  In 2015-16, the expenditure was 69% of the budget estimate, while in 2016-17, the actual expenditure over shot the budget estimate (119% of budget estimate).   
The Smart Cities Mission aims to develop cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment, and apply 'smart' solutions.  So far, 99 cities have been selected under the Mission.282 These were selected via the Smart City challenge. The cities were evaluated based on their Smart City Proposals, which consists of an area based development strategy, and a pan city development strategy.  The mission will be operated as a Centrally Sponsored Scheme The budget estimate for 2018-19 is Rs 6,619 crore, an increase of 54% over the revised estimates of 2017-18.   

## Mission ( Rs Crore)

| Year    | Budgeted    | Actuals    | % utilised    |
|---------|-------------|------------|---------------|
| 2015-16 | 2,020       | 1,484      | 73%           |
| 2016-17 | 3,215       | 4,412      | 137%          |
| 2017-18 | 4,000       | 4,000*     | 100%          |
| 2018-19 | 6,169       |            |               |

*Revised estimates. Sources: Budget documents 2015-16 to 2018-19; PRS. 

In 2016-17, the actual expenditure increased by 197% over the actual expenditure in 2015-16. Correspondingly, 2016-17 saw overspending against the budget estimate (137% of budget estimate).  In 2017-18, the actual expenditure is estimated to be lower than in 2016-17, and equal to the budget estimate. A total investment of Rs 2,01,981 crore is proposed by the 99 cities under their smart city plans.283  The central and state governments will meet only part of the project costs.  The central government will 

provide financial assistance of up to Rs. 48,000 
crore over five years, that is, an average of Rs. 100 
crore per city per year.  The states and ULBs will 
have to contribute an equal amount, and generate 
the additional amount as required.  Other sources of 
financing include, PPP's, borrowings, and 
innovative mechanisms such as municipal bonds.   

So far, of the cities that were selected in round one 
of the competition (January 2016), 49% of the 
projects are in the detailed project report 
preparation phase.  Almost all cities selected in 
round two have set up a special purpose vehicle 
(SPV).  Cities recently selected in round three and 
four are in the process of establishing Special 
Purpose Vehicles (SPV).284 

## Swachh Bharat Mission (Sbm)- Urban

Swachh Bharat Mission (SBM), launched in 
October 2014, aims to eliminate open defecation 
and achieve 100% scientific management of 
municipal solid waste in all 4,041 statutory towns 
by October 2, 2019.285,286   

The budget estimate for 2018-19 is Rs 2,500 crore.  
This is a 9% increase over the revised estimates of 
2017-18.   

The table below shows the allocations towards 
SBM- Urban.   

## Table 57: Allocation Towards Sbm Urban ( Rs Crore)

| Year    | Budgeted    | Actuals    | % utilised    |
|---------|-------------|------------|---------------|
| 2014-15 | 1,690*      | 859        | 51%           |
| 2015-16 | 1,000*      | 766        | 77%           |
| 2016-17 | 2,300       | 2,135      | 93%           |
| 2017-18 | 2,300       | 2,300      | 100%          |

*Revised estimates. Sources: Budget documents 2015-16 to 2018-19; PRS. 

In 2016-17, the actual expenditure was 179% 
higher over the actual expenditure of 2015-16.  
Since 2014-15, the Ministry has underutilised the 
funds allocated towards the scheme.  However, the 
utilisation of funds has improved each year.  In 
2017-18, the actual expenditure is estimated to 
equal the budget estimate.     

The total estimated cost of implementation of 
SBM- Urban is Rs 62,009 crore.  Of this, the share 
of the central government is Rs 14,623 crore, and 
states' assistance will amount to Rs 4,874 crore.  
The remainder is to be financed via various sources 
such as the private sector, Swachh Bharat Kosh, 
market borrowing, and external assistance.   

Achievements:  The table below shows the number 
of toilets constructed as of November 2017, as 
compared to the targets set for October 2019.  

 
Target 
Achievement 
% 
achieved 
Community and Public toilets 
5,08,000 
2,43,152 
48% 
66,42,000 
42,72,609 
64% 
Individual Household toilets 

Sources: Ministry of Housing and Urban Affairs; PRS. 

As of November 2017, 22% of the total municipal solid waste generated daily, is processed.287   
Awareness:  The Swachhta Status Report, 2016 
showed that as per information collected in 2012, people may not use toilets in  spite of having access to them.288  During 2012, 0.2% households in urban areas had access to toilets but were not using them. The reasons for not using them include, not clean/ insufficient water, malfunctioning of the toilets, and personal preference.  In the Standing Committee, Urban Development, Report on Demands for grants 2017-18, the Ministry noted that it has shifted emphasis from construction of toilets to behavioural change.273  15% of the total central allocation is earmarked for the Information, Education, and Communication (IEC) and Public Awareness component of the scheme.  Of the total central release as on January 2, 2018, 12% of the release accounts for this component.289   

## Other Issues To Consider

Additional investment: In the current landscape of rising unplanned urbanisation, the High Powered Expert Committee (HPEC) (2011) for Estimating the Investment Requirements for Urban Infrastructure Services had estimated Rs 39 lakh crore (at 2009-10) prices for the period from 2012- 2031.290   As per their framework, the investment in urban infrastructure should increase from 0.7% of GDP in 2011-12 to 1.1% of GDP by 2031-32. 

The pace of urbanisation is increasing in the country.  As per the 2011 census, around 31% of the country's population resided in urban areas.291 By 2031, around 600 million (43%) people will live in urban areas, an increase of over 200 million in 20 years.  Given the pace of urbanisation, large capital investments are needed for infrastructure projects which includes support from central and state governments in the form of capital grants. The budgetary outlays alone are not enough to the service the growing demands on local governments.292  Alternate sources of financing are required to meet the funding gap.292  The flagship schemes of the Ministry (such as Smart Cities Mission, Swachh Bharat Mission) seek to meet their financing requirements through a mix of sources such as borrowings, municipal bond financing, and PPPs. 

Financial capacity of ULBs: The Constitution 
(74th Amendment) Act, 1992 devolved certain 
matters relating to urban development to urban 
local bodies, including the power to collect certain 
taxes.  Some of the functions assigned to urban 
local bodies include urban planning, planning for 
economic and social development, and urban 
poverty alleviation.  The new schemes under the 
Ministry, seek to decentralize the planning process 
to the city and state level, by giving them more 
decision making powers.  So, while earlier, 
majority of the funding came from the central and 
state governments, now, a significant share of the 
funding needs to be raised by the cities themselves. 

There is an imbalance between the functions and 
finances of urban local bodies.293  The ULBs in 
India are amongst the weakest in the world both in 
terms of capacity to raise a resources and financial 
autonomy.  The share of own revenue for ULBs has 
been declining from 63% in 2002-03, 53% in 2007-
8, and 44% in 2015-16.294,295  Several states have 
not devolved enough taxation powers to local 
bodies.  Further, local governments collect only a 
small fraction of their potential tax revenue.  These 
devolved funds are largely tied in nature, to either 
specific sectors or schemes.  This constrains the 
spending flexibility of ULBs.   

PPP's have been an important instrument to finance 
and develop infrastructure projects.  However, 
projects in many sectors require support from 
ULBs in the form of additional financial resources.  
Inability to service such funding requirements 
constrains project implementation.292  

In such cases, ULBs can access capital markets 
through issuance of municipal bonds.  Municipal 
bonds are marketable debt instruments issued by 
ULBs, the funds raised may be used for capital 
projects, refinancing of existing loans, and meeting 
working capital requirements.  The Securities and 
Exchange Board of India regulations (2015) 
regarding municipal bonds provide that, to issue 
such bonds, municipalities must: (i) not have 
negative net worth in any of the three preceding 
financial years, and (ii) not have defaulted in any 
loan repayments in the last one year.296  Therefore, 
a city's performance in the bond market depends on 
its fiscal performance.   

To strengthen alternate sources of financing, the 
Department of Economic Affairs, Ministry of 
Finance has initiated a pilot program for readiness 
assessment and model development for Municipal 
bond financing in select urban local bodies.292   

## 

281 Mission Statement and Guidelines, Atal Mission for Rejuvenation and Urban Transformation, Ministry of Urban Development, June 2015, http://amrut.gov.in/writereaddata/AMRUT%20Guidelines%20.pdf. 282 "Silvassa Tops the List of Winner Cities- Erode, Diu, Biharsharif, Itanagar and Kavaratti Selected in Round 4 of Smart Cities- Bareilly, Moradabad and Saharanpur in UP also selected- 99 Smart Cities selected so Far", Press Information Bureau, Ministry of Housing and Urban Affairs, January 19, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=175750. 283Smart Cities, Ministry of Housing and Urban Affairs, http://www.mohua.gov.in/cms/smart-cities.php.  Last accessed on February 8, 2018. 284Unstarred Question no. 490, Ministry of Housing and Urban Affairs, Lok Sabha, February 6, 2018, http://164.100.47.190/loksabhaquestions/annex/14/AU490.pdf. 285 "Swachh Bharat Mission needs to become a Jan Andolan with participataion from every stakeholder: Hardeep Puri 1,789 Cities have been declared ODF conference on PPP model for waste to energy projects", Ministry of Housing and Urban Affairs, Press Information Bureau, November 30, 2017, http://pib.nic.in/newsite/PrintRelease.aspx?relid=173995. 286 "PM launches Swachh Bharat Abhiyaan", Prime Minister's Office, Press Information Bureau, October 2, 2014, http://pib.nic.in/newsite/PrintRelease.aspx?relid=110247. 287 Swachh Bharat Urban, Ministry of Housing and Urban Affairs, last accessed on January 25, 2018, http://swachhbharaturban.gov.in/writereaddata/Statewise_status_of_implementation.pdf. 288Swachhta Status Report, National Sample Survey Office, 2016, https://smartnet.niua.org/sites/default/files/resources/swachhta_status_report_2016_17apr17.pdf. 289 Unstarred Question no. 211, Ministry of Housing and Urban Affairs, Lok Sabha, January 2, 2018, http://164.100.47.190/loksabhaquestions/annex/13/AS211.pdf. infrastructure services, March 2011, http://icrier.org/pdf/FinalReport-hpec.pdf. 291 Challenge of Urbanisation, Approach to the 12th five year plan, Planning Commission, October 2011, http://planningcommission.gov.in/plans/planrel/12appdrft/appraoch_12plan.pdf. September 2017, https://www.pppinindia.gov.in/documents/20181/33749/Guidance+on+use+of+Municipal+Bonds+for+PPP+projects.pdf/037cb143-8305-
4c57-8f3c-32e5a329297f. Committee%20on%20Financing%20Urban%20Infrastructure%20in%20the%2012th%20Plan%20_0.pdf. 294 Report of the Steering Committee on Urbanisation, Planning Commission, Government of India, November 2012, 

## 

  
 
Demand for Grants 2018-19 Analysis Petroleum and Natural Gas The Ministry of Petroleum and Natural Gas is responsible for: (i) exploration of petroleum (including natural gas), (ii) supply and distribution of petroleum, and (iii) planning and development of the petroleum industry in the country, among others.297  It has been allocated Rs 31,101 crore for 2018-19.298  This note examines the allocations for the Ministry under Union Budget 2018-19. Petroleum products are used as raw materials in various sectors and industries such as transport and petrochemicals.  Further, they may also be used in factories to operate machinery or fuel generator sets.  Any fluctuation in the price of petrol and diesel impact the production and transport costs of various items.  When compared to other neighbouring countries, India has the highest prices for petrol and diesel.  On the other hand, it has the lowest price for kerosene. 

Note: Prices as on February 1, 2018.  Prices for India pertain to Delhi for petrol and diesel, and Mumbai for kerosene. Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS. 

Imports:  India imports 84% of the petroleum products consumed in the country.  This implies that any change in the global prices of crude oil has a significant impact on the domestic price of petroleum.  In 2000-01, net import of petroleum products constituted 75% of the total consumption in the country.  This increased to 95% in 2016-17. Figure 38 shows the amount of petroleum products consumed in the country, and the share of imports. 

 
Note: Production is the difference between the total consumption in the country and the net imports. Sources: Petroleum Planning and Analysis Cell; PRS. 

The Ministry of Petroleum and Natural Gas 
provides subsidy on LPG cylinders and kerosene.  
This subsidy seeks to fill the gap between 
production cost of these petroleum products, and 
the price at which they are provided to consumers.  
The production cost of these items is dependent on 
the global crude oil price, which the primary input.  

The Ministry's expenditure has followed the trend 
in the global crude oil prices.  As seen in Figure 39, 
the Ministry's expenditure increased in the early 
2010s with an increase in the global prices of 
crude.  During this period, the actual expenditure of 
the Ministry exceeded the budget estimates.   

With a fall in crude oil prices from 2014 onwards, 
the expenditure has gradually reduced.  During this 
period, the Ministry has also sought to plug 
leakages in the delivery of LPG subsidy by directly 
transferring the subsidy to the bank account of the 
beneficiary under the PAHAL scheme (discussed 
later).  It has also sought to weed out duplicate and 
ghost beneficiaries under the PAHAL scheme.  
Between 2010-11 and 2018-19, the Ministry's 
expenditure reduced by 3% annually, on average. 

Under-recoveries:  Under-recovery refers to the difference in the cost of producing petroleum products, and the price at which they are delivered to consumers.  They indicate the loss incurred by oil marketing companies while supplying these products.  This difference is shared by the central government and the oil companies.  Figure 40 shows that under-recoveries have reduced with a fall in global prices of crude oil. 

Note: Data for 2017-18 till September 2017. Sources: Petroleum Planning and Analysis Cell; PRS. 

Developments in Union Budget 2018-19 

Road and Infrastructure Cess:  Currently, the 
government levies the road cess on the import 
and production of petrol and diesel.  The Union 
Budget 2018-19 renames this to the road and 
infrastructure cess.  It also proposes certain 
changes in the excise and customs duty levied on 
petrol and diesel. 

 
Petrol 
Diesel 
Before 
After 
Before 
After 
Customs 
6.48 
4.48 
8.33 
6.33 
Cess 
6.00 
8.00 
6.00 
8.00 
Total 
12.48 
12.48 
14.33 
14.33 
Excise 
7.66 
5.66 
10.69 
8.69 
Cess 
6.00 
8.00 
6.00 
8.00 
Total 
13.66 
13.66 
16.69 
16.69 

The total tax incidence on the consumers 
remains unchanged.  However, there is Rs 2/litre 
shift from excise and customs duty towards the 
cess.  Note that unlike customs and excise duty 
collections, proceeds from cesses do not form 
part of the divisible pool of taxes share with 
states.  This means that Rs 2/litre of petrol and 
diesel imported or produced will move from the 
divisible pool to the cess which is entirely with 
the centre.  Given that 42% of the divisible taxes 
are shared with states following the 14th Finance 
Commission, this would mean a loss of 84 paise 
per litre of petrol/diesel to states. 

Increase in coverage under Pradhan Mantri 
Ujjwala Yojana:  Under the scheme, the 
Ministry provides LPG connections in the name 
of the women of the household.  The scheme had 
a target of giving five crore connections between 
2016-17 and 2018-19.  Union Budget 2018-19 
proposes to increase this target to eight crore. 

## Overview Of Finances Budget Estimates 2018-19 (Details In Annexure) Table 60: Allocations For The Ministry (Rs Crore)

% 
Head 
Actual  
2016-17 
Revised  
2017-18 
Budget  
2018-19 
change 
LPG Subsidy 
18,678 
15,656 
20,378 
30.2% 
Kerosene Subsidy 
8,861 
8,804 
4,555 
-48.3% 
Royalty to States 
35 
7,005 
2,326 
-66.8% 
PDH Pipeline 
450 
400 
1,674 
318.5% 
National Seismic Programme 
- 
10 
1,300 13260.7% 
Strategic Oil Reserves 
2,031 
1,141 
781 
-31.6% 
Others 
177 
179 
87 
-51.4% 
Total 
30,231 
33,195 
31,101 
-6.3% 

Sources: Expenditure Budget, Union Budget 2018-19; PRS. 

LPG Subsidy:  The Ministry provides subsidy on LPG cylinders to beneficiaries.  Prior to 2013, this subsidy was provided in the form of subsidised cylinders.  Following the launch of the PAHAL 
scheme in 2013, this subsidy is directly credited to the bank accounts of the beneficiary.299  In 2018- 19, the Ministry is estimated to spend Rs 20,378 crore on LPG subsidy, which is 30% higher than the revised estimates of 2018-19. 

Kerosene Subsidy:  The Ministry provides subsidised kerosene through the Public Distribution System (PDS).  In 2018-19, the Ministry has allocated Rs 4,555 crore for the subsidy, which is 48% lower than the revised estimates of 2017-18. 

Royalty to States:  The central government grants mining leases under the Oilfields (Regulation and Development) Act, 1948 and receives royalty and licensing fee for exploration and production of petroleum.  The central government has estimated to raise Rs 9,877 crore as royalty during 2018- 19.300  It will pay Rs 2,326 crore to the states.   
PDH Pipeline:  The Phulpur-Dhamra-Haldia 
(PDH) Pipeline is being developed by GAIL India to transport natural gas.301  The project will connect five states - Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal - to the National Gas Grid.  In 2018-19, the project has been allocated Rs 1,674 crore. 

National Seismic Programme:  The Ministry is conducting a seismic survey of all sedimentary basins of India, where limited data is available. The Programme was launched in October 2016 with an estimated expenditure of Rs 5,000 crore.302 It is expected to be completed by 2019-20.  The Programme has been allocated Rs 1,300 crore for 2018-19.  This is significantly higher than the allocation of Rs 10 crore in 2017-18. 

## Key Issues And Analysis A. Trend In Crude Oil And Retail Prices Of Petrol And Diesel

Over the last five years, the global price of crude oil (Indian basket) has come down from USD 110 in January 2013 to USD 67 in January 2018, having touched a low of USD 28 in January 2016. While there has been a 63% drop in the price of global crude over this five-period, the retail price of petrol in India has reduced by 3%.  During this period, the retail price of diesel increased by 30%. Figure 41 and Figure 42 show the trends in prices of global crude oil and retail price of petrol and diesel in India over the last five years. 

Note: Subsidy indicated in the graph is notional.  While 
calculating the amount of subsidy, various other factors such as 
cost of domestic inputs will also have to be accounted.  Global 
Crude Oil Price is for the Indian basket.  Figures reflect average 
monthly retail price of petrol in Delhi.   
Sources: Petroleum Planning and Analysis Cell; Indian Oil 
Corporation Limited; PRS. 

Sources: Petroleum Planning and Analysis Cell; Indian Oil Corporation Limited; PRS. 

The central government has used taxes to prevent 
sharp fluctuations in the retail price of diesel and 
petrol.  In the past, when global crude oil prices 
have increased, duties have been cut.303  Since 
2014, as global crude oil prices declined, excise 
duties have been increased.  As a result, the central 

government's revenue from excise duty on petrol and diesel increased annually at a rate of 46% between 2013-14 and 2016-17.  During the same period, the total sales tax collections of states (from petrol and diesel) increased annually by 9%.   

## B. Subsidy Paid On Kerosene And Lpg

The Ministry provides subsidy for: (i) LPG cylinders, and (ii) supply of kerosene through the PDS system.  The subsidy seeks to provide these products to beneficiaries at prices lower than production costs.  Over the last few years, the Ministry's expenditure on subsidy has reduced from Rs 96,880 crore in 2012-13 to an estimated Rs 24,933 crore in 2018-19 (see Figure 44). 

Source: Union Budget documents; PRS. 

The Ministry is estimated to spend 80% of its total budget on providing this subsidy in 2018-19.  As seen in Figure 45, a large proportion of this will be 

for LPG subsidy.  Between 2015-16 and 2018-19, 
the expenditure on LPG subsidy reduced from Rs 
22,660 crore to an estimated Rs 20,378 crore 
(average reduction of 3% annually).  During this 
period, the expenditure on kerosene subsidy 
reduced from Rs 7,339 crore to Rs 4,555 (average 
reduction of 15% annually. (Break-up of petroleum 
subsidy unavailable for previous years.) 

## Lpg Subsidy

The Ministry has been directly transferring the 
LPG subsidy into the bank account of the 
beneficiary under the PAHAL scheme.  The 
Ministry stated that it had weeded out 3.77 crore 
duplicate, inactive or ghost beneficiary accounts 
under the scheme (for state-level details, see Table 
66 in the Annexure). 304,316   

The CAG (2016) noted that while de-duplication 
checks had been carried out by agencies and oil 
companies, its audit identified 74,180 LPG 
customers linked to 37,090 Aadhaar (see Table 61).  
This indicated multiple LPG connections having 
the same Aadhaar number and bank details.305   

No. of LPG 
unique 
Combination of 
Oil Marketing 
Companies 
No. of 
Aadhaar 
numbers 
consumer IDs 
HPCL and IOCL 
13,698 
27,396 
IOCL and BPCL 
10,640 
21,280 
BPCL and HPCL 
12,752 
25,504 
Total 
37,090 
74,180 

Note: HPCL - Hindustan Petroleum Corporation Limited. IOCL 
- Indian Oil Corporation Limited.  BPCL - Bharat Petroleum 
Corporation Limited. 
Sources: CAG Report on implementation of PAHAL; PRS. 

This Ministry stated that the implementation of 
PAHAL has resulted in savings in the delivery of 
LPG subsidy (see Table 62).  Note that the CAG 

(2016) had observed that there was a difference in the savings estimated by the Ministry and oil companies.  It noted inconsistencies in the calculations made by both, and stated that the actual savings may be less than estimates made by the Ministry and the oil companies.305  

| Year              | Estimated savings    |
|-------------------|----------------------|
| 2014-15           | 14,818               |
| 2015-16           | 6,443                |
| 2016-17           | 4,608                |
| 2017-18 (Apr-Nov) | 3,799                |

The CAG audit observed that as of December 2015, 1.55 crore beneficiaries had not joined the PAHAL scheme for direct benefit transfer of subsidy.  It noted that there was a possibility that this includes consumers who deserve the subsidy, but may not be able to avail it.305 
Give it up campaign:  The Ministry launched the 
'Give it Up' campaign to encourage domestic LPG 
consumers, who can afford to pay the market price of LPG, to voluntarily surrender their LPG subsidy.306  As on January 30, 2018, more than one crore LPG consumers had voluntarily surrendered their subsidy.307  The government also disqualified consumers with an annual income of more than Rs 10 lakh from receiving the subsidy.297 The CAG audit (2016) noted that the implementation of PAHAL and the 'Give it Up' 
campaign had resulted in the reduction in the offtake of subsidised LPG cylinders.  However, it noted that lower offtake did not have a significant impact on subsidy savings, as these savings were primarily a  result of the fall in global crude prices.305 
Pradhan Mantri Ujjwala Yojana:  According to the National Sample Survey (2011-12), more than 67% of the rural households in the country used firewood as the primary source of energy for cooking (see Figure 46).308  In urban areas, most of the households (68%) used LPG for cooking.  (For a state-wise details on the primary source of energy for cooking in rural and urban areas and the change in preferences between 1993-94, see Table 67, Table 68, Table 69, and Table 70 of the Annexure.) 

The Pradhan Mantri Ujjwala Yojana was launched 
in 2016 with an objective of providing clean 
cooking fuel, i.e., LPG, to households which rely 
on firewood, coal, dung cakes, etc. for cooking.309  
Under the scheme, Rs 1,600 is provided as an 
initial cost to the beneficiary households.310,316  
This amount seeks to cover costs for installation of 
an LPG connection.311 

The scheme has a target of providing five crore 
LPG connections to BPL families between 2016-17 
and 2018-19 (see Table 63 below).  These 
connections are issued in the name of the women of 
the household, and the BPL families are identified 
based on the Socio-Economic Caste Census.312 

| Financial Year    |   Target (Crore)  |
|-------------------|-------------------|
| 2016-17           |               1.5 |
| 2017-18           |               1.5 |
| 2018-19           |               2   |

Sources: 18th Report of the Standing Committee on Petroleum and Natural Gas on the Demands for Grants of the Ministry of Petroleum and Natural Gas (2017-18), March 2017; PRS. 

As of February 2018, 3.39 crore new connections 
had been issued.313  For a state-wise break up of 
new connections, see Table 71 in the Annexure.  
The Union Budget 2018-19 proposes to increase 
this target to eight crore beneficiaries.314 

## Kerosene Subsidy

Over the last few years, the Ministry's expenditure on providing subsidy for kerosene has reduced from Rs 24,804 crore in 2014-15 to an estimated Rs 4,555 crore in 2018-19 (see Table 64).  The Ministry stated that with the increase in LPG coverage and electrification in villages, the allocation for kerosene had been rationalised.315 
297 Annual Report 2016-17, Ministry of Petroleum and Natural Gas, http://petroleum.nic.in/sites/default/files/AR16-17.pdf. 298 Demands for Grants for the Ministry of Petroleum and Natural Gas for 2018-19, http://www.indiabudget.gov.in/ub2018-19/eb/sbe72.pdf. 299 About the Scheme, PAHAL - Direct Benefits Transfer for LPG, Ministry of Petroleum and Natural Gas, http://petroleum.nic.in/dbt/whatisdbtl.html. 300 Receipt Budget, Union Budget 2018-19, http://www.indiabudget.gov.in/ub2018-19/rec/allrec.pdf. 301 Brief Report on Jagdishpur- Haldia & Bokaro- Dhamra Pipeline (JHBDPL Phase-II) Project, Environment Clearance 302 Annual Report 2016-17, Ministry of Petroleum and Natural Gas, http://petroleum.nic.in/sites/default/files/AR16-17.pdf. 303 Report of the Committee on Pricing and Taxation of Petroleum Products, Ministry of Petroleum and Natural Gas, February 2006, http://petroleum.nic.in/sites/default/files/Report1.pdf. 304 Unstarred Question No. 278, Lok Sabha, Ministry of Petroleum and Natural Gas, Answered on February 5, 2018, http://164.100.47.190/loksabhaquestions/annex/14/AU278.pdf. 305 Report of the Comptroller and Auditor General of India on Implementation of PAHAL (DBTL) Scheme (Pratyaksh Hanstantrit Labh Yojana), 2016, http://www.cag.gov.in/sites/default/files/audit_report_files/Unio Lighting, 2011-12, NSS 68th Round, July 2011-June 2012, 

| Year       | Expenditure on kerosene subsidy    |
|------------|------------------------------------|
| 2014-15    | 24,804                             |
| 2015-16    | 11,496                             |
| 2016-17    | 8,861                              |
| 2017-18 RE | 8,804                              |
| 2018-19 BE | 4,555                              |

Sources: Demands for Grants for the Ministry of Petroleum and 
Natural Gas (2018-19); Unstarred Question No. 2295, Lok 
Sabha, Ministry of Petroleum and Natural Gas, Answered on 
January 1, 2018; PRS. 

The Standing Committee on Petroleum and Natural 
Gas (2017) had recommended that the Ministry 
should reduce the expenditure on this subsidy and 
work towards the eventual withdrawal of the 
subsidy.316  It noted that an increase in the coverage 
of LPG beneficiaries is necessary to reduce their 
dependence on kerosene.  This will result in the 
usage of cleaner fuel, promote the health of users, 
and address the problem of adulteration.   

The Committee also recommended that states 
should be encouraged to move towards the direct 
cash transfer of kerosene subsidy to reduce 
inefficiencies in the delivery.315  As of January 1, 
2018, Jharkhand had implemented direct cash 
transfer in kerosene in 24 districts.  The Ministry 
stated that other states had been requested to join 
the scheme.315  

Ministry of Statistics and Programme Implementation, http://mospi.nic.in/sites/default/files/publication_reports/nss_rep ort_567.pdf. 309 About Pradhan Mantri Ujjwala Yojana, Ministry of Petroleum and Natural Gas, http://www.pmujjwalayojana.com/about.html. 310 Pradhan Mantri Ujjwala Yojana (PMUY) - modalities for 
implementation, Ministry of Petroleum and Natural Gas, June 28, 2016, http://petroleum.nic.in/sites/default/files/P_17018_1_2016_Lpg %28Pt%29_PMUY.pdf. 311 S. O. 753 (E), Gazette of India, Ministry of Petroleum and Natural Gas, March 6, 2017, http://petroleum.nic.in/sites/default/files/Policies- LPG_Aadhaar_6_3_2017.pdf. 312 About PMUY, Website of the Pradhan Mantri Ujjwala Yojana, Last accessed on February 19, 2018, http://www.pmujjwalayojana.com/about.html. 313 State-wise PMUY connections released, Website of the Pradhan Mantri Ujjwala Yojana, Last accessed on February 19, 2018, http://www.pmujjwalayojana.com/releasedconnections.html. 314 Union Budget Speech 2018-19, http://www.indiabudget.gov.in/ub2018-19/bs/bs.pdf. 315 Unstarred Question No. 2295, Lok Sabha, Ministry of Petroleum and Natural Gas, Answered on January 1, 2018, http://164.100.47.190/loksabhaquestions/annex/13/AU2295.pdf. 316 18th Report of the Standing Committee on Petroleum and Natural Gas on the Demands for Grants of the Ministry of Petroleum and Natural Gas (2017-18), March 2017, http://164.100.47.193/lsscommittee/Petroleum%20&%20Natura l%20Gas/16_Petroleum_And_Natural_Gas_18.pdf.   

## Annexure Detailed Expenditure Table

Table  provides an overview of expenditure on the major schemes of the Ministry, provided in the Demands for Grants (2018-19). In addition, major shifts in the budgetary allocation are shown in the last two columns.   

Absolute 
increase in 2018-
Head 
Actual 
2016-17 
Budget  
2017-18 
Revised  
2017-18 
Budget  
2018-19 
% change 
in BE 2018-
19 over RE 
19 (BE) over 
2017-18 (RE) 
2017-18 
Secretariat 
28 
31 
34 
32 
-1 
-4.3% 
Payment of royalty to states 
35 
44 
7,005 
2,326 
-4,679 
-66.8% 
Strategic Oil Reserves 
2,031 
2,579 
1,141 
781 
-360 
-31.6% 
LPG Subsidy 
18,678 
16,076 
15,656 
20,378 
4,721 
30.2% 
Of which: 


Direct Benefit Transfer 
13,000 
13,097 
13,097 
16,478 
3,381 
25.8% 
LPG Connection to Poor Households 
2,500 
2,500 
2,252 
3,200 
948 
42.1% 
Other subsidy 
3,178 
454 
282 
608 
326 
115.3% 
Kerosene Subsidy 
8,861 
8,924 
8,804 
4,555 
-4,249 
-48.3% 
Of which: 


Cash Incentives for Kerosene Distribution 
80 
107 
106 
254 
148 
140.5% 
Direct  Benefit Transfer 
0 
150 
34 
96 
62 
180.3% 
Under-recovery 
8,781 
8,662 
8,662 
4,200 
-4,462 
-51.5% 
Phulpur Dhamra Haldia Pipeline  
450 
1,200 
400 
1,674 
1,274 
318.5% 
National Seismic Programme 
- 
- 
10 
1,300 
1,290 
- 
Autonomous Bodies 
149 
303 
145 
55 
-91 
-62.3% 
Total 
30,231 
29,158 
33,195 
31,101 
-2,095 
-6.3% 

Sources: Expenditure Budget, Union Budget 2017-18; PRS.   
 
The Ministry of Petroleum and Natural Gas stated that it had weeded out 3.77 crore duplicate, inactive or ghost beneficiary accounts under the PAHAL scheme.  State-wise details of the accounts can be found in the table below. 

Weeded Out 
State / UT 
Customers 
(Lakh) 
Andhra Pradesh 
28.72 
Arunachal Pradesh 
0.85 
Assam 
10.76 
Bihar 
11.42 
Chhattisgarh 
5.48 
Goa 
1.36 
Gujarat 
19.37 
Haryana 
11.09 
Himachal Pradesh 
6.62 
Jammu and Kashmir 
7.47 
Jharkhand 
4.89 
Karnataka 
15.28 
Kerala 
11.18 
Madhya Pradesh 
19.34 
Maharashtra 
36.15 
Manipur 
1.11 
Meghalaya 
0.67 
Mizoram 
0.72 
Nagaland 
0.79 
Odisha 
7.75 
Punjab 
19.53 
Rajasthan 
12.7 
Sikkim 
0.61 
Tamil Nadu 
23.46 
Telangana 
21.51 
Tripura 
1.19 
Uttar Pradesh 
55.87 
Uttarakhand 
7.73 
West Bengal 
13.64 
Andaman and Nicobar Islands 
0.31 
Chandigarh 
1.59 
Dadra and Nagar Haveli 
0.11 
Daman and Diu 
0.19 
Delhi 
17.9 
Lakshadweep 
0.01 
Puducherry 
0.56 
Total 
377.94 

Source: Unstarred Question No. 278, Lok Sabha, Ministry of Petroleum and Natural Gas, Answered on February 5, 2018; PRS. 

State 
Coal and 
Coke 
Firewood 
and Chips 
LPG 
Dung 
Cake 
Kerosene 
Other 
Sources 
No Cooking 
Arrangement 
All 
Andhra Pradesh 
2 
675 
289 
2 
2 
3 
27 
1000 
Assam 
1 
810 
172 
0 
3 
5 
9 
1000 
Bihar 
6 
564 
59 
208 
5 
157 
1 
1000 
Chhattisgarh 
9 
932 
15 
31 
2 
5 
6 
1000 
Gujarat 
0 
797 
139 
9 
35 
7 
12 
1000 
Haryana 
0 
417 
267 
244 
12 
58 
3 
1000 
Jharkhand 
143 
777 
29 
29 
3 
2 
16 
1000 
Karnataka 
0 
805 
147 
0 
20 
7 
21 
1000 
Kerala 
1 
663 
308 
0 
1 
7 
20 
1000 
Madhya Pradesh 
2 
808 
62 
106 
5 
7 
8 
1000 
Maharashtra 
0 
621 
231 
2 
10 
97 
38 
1000 
Odisha 
9 
870 
39 
18 
2 
56 
6 
1000 
Punjab 
0 
305 
305 
303 
27 
42 
19 
1000 
Rajasthan 
0 
893 
89 
6 
7 
4 
1 
1000 
Tamil Nadu 
0 
583 
372 
0 
25 
2 
18 
1000 
Uttar Pradesh 
2 
561 
67 
334 
1 
28 
6 
1000 
West Bengal 
65 
629 
66 
53 
5 
175 
6 
1000 
All-India 
11 
673 
150 
96 
9 
49 
13 
1000 

Sources: Energy Sources of Indian Households for Cooking and Lighting, 2011-12, NSS 68th Round, July 2011-June 2012; PRS. 

State 
Coal and 
Coke 
Firewood 
and Chips 
LPG 
Dung 
Cake 
Kerosene 
Other 
Sources 
No Cooking 
Arrangement 
All 
Andhra Pradesh 
1 
101 
773 
0 
27 
7 
91 
1000 
Assam 
1 
168 
710 
1 
57 
23 
40 
1000 
Bihar 
40 
249 
605 
55 
5 
33 
13 
1000 
Chhattisgarh 
113 
347 
398 
33 
27 
21 
59 
1000 
Gujarat 
9 
159 
620 
3 
105 
57 
47 
1000 
Haryana 
0 
60 
865 
31 
14 
5 
25 
1000 
Jharkhand 
311 
56 
539 
5 
12 
9 
68 
1000 
Karnataka 
0 
148 
640 
0 
68 
4 
139 
1000 
Kerala 
0 
363 
554 
0 
6 
5 
72 
1000 
Madhya Pradesh 
8 
257 
652 
18 
36 
2 
27 
1000 
Maharashtra 
2 
57 
745 
0 
101 
15 
80 
1000 
Odisha 
38 
365 
435 
2 
48 
27 
85 
1000 
Punjab 
1 
67 
754 
32 
100 
7 
38 
1000 
Rajasthan 
5 
187 
716 
2 
20 
0 
70 
1000 
Tamil Nadu 
0 
112 
709 
0 
85 
2 
92 
1000 
Uttar Pradesh 
6 
210 
668 
75 
10 
8 
23 
1000 
West Bengal 
135 
107 
565 
6 
87 
15 
84 
1000 
All-India 
21 
140 
684 
13 
57 
15 
69 
1000 

Sources: Energy Sources of Indian Households for Cooking and Lighting, 2011-12, NSS 68th Round, July 2011-June 2012; PRS. 


| Source of energy for cooking    | 1993-94    | 1999-2000    | 2004-05    | 2009-10    | 2011-12    |
|---------------------------------|------------|--------------|------------|------------|------------|
| Coal and Coke                   | 1%         | 2%           | 1%         | 1%         | 1%         |
| Firewood and Chips              | 78%        | 76%          | 75%        | 76%        | 67%        |
| LPG                             | 2%         | 5%           | 9%         | 12%        | 15%        |
| Dung Cake                       | 12%        | 11%          | 9%         | 6%         | 10%        |
| Kerosene                        | 2%         | 3%           | 1%         | 1%         | 1%         |
| No Cooking Arrangement          | 1%         | 1%           | 1%         | 2%         | 1%         |
| Other Sources                   | 4%         | 3%           | 4%         | 3%         | 5%         |
| All Rural Households            | 100%       | 100%         | 100%       | 100%       | 100%       |

Sources: Energy Sources of Indian Households for Cooking and Lighting, 2011-12, NSS 68th Round, July 2011-June 2012; PRS. 

| Source of energy for cooking    | 1993-94    | 1999-2000    | 2004-05    | 2009-10    | 2011-12    |
|---------------------------------|------------|--------------|------------|------------|------------|
| Coal and Coke                   | 6%         | 4%           | 3%         | 2%         | 2%         |
| Firewood and Chips              | 30%        | 22%          | 22%        | 18%        | 14%        |
| LPG                             | 30%        | 44%          | 57%        | 65%        | 68%        |
| Dung Cake                       | 2%         | 2%           | 2%         | 1%         | 1%         |
| Kerosene                        | 23%        | 22%          | 10%        | 7%         | 6%         |
| No Cooking Arrangement          | 6%         | 4%           | 5%         | 7%         | 7%         |
| Other Sources                   | 3%         | 1%           | 2%         | 2%         | 2%         |
| All Urban Households            | 100%       | 100%         | 100%       | 100%       | 100%       |

Sources: Energy Sources of Indian Households for Cooking and Lighting, 2011-12, NSS 68th Round, July 2011-June 2012; PRS. 


States / UT 
Number of connections 
released as on 31-03-2017 
Number of connections 
released as on 16-02-2018 
Andhra Pradesh 
63,428 
79,893 
Arunachal Pradesh 
- 
5,253 
Assam 
2 
8,74,893 
Bihar 
24,76,953 
47,00,789 
Chhattisgarh 
11,05,441 
18,66,588 
Goa 
954 
983 
Gujarat 
7,52,354 
12,56,221 
Haryana 
2,78,751 
3,51,723 
Himachal Pradesh 
1,601 
26,853 
Jammu and Kashmir 
2,65,787 
3,65,115 
Jharkhand 
5,36,912 
10,80,352 
Karnataka 
15,840 
8,61,080 
Kerala 
11,241 
34,642 
Madhya Pradesh 
22,39,821 
31,63,875 
Maharashtra 
8,58,808 
17,86,364 
Manipur 
25 
27,064 
Meghalaya 
- 
29,161 
Mizoram 
- 
704 
Nagaland 
- 
8,208 
Odisha 
10,11,955 
20,58,124 
Punjab 
2,45,008 
3,73,463 
Rajasthan 
17,22,694 
25,32,655 
Sikkim 
- 
576 
Tamil Nadu 
2,72,749 
9,37,746 
Telangana 
41 
41 
Tripura 
- 
37,861 
Uttar Pradesh 
55,31,159 
64,02,186 
Uttarakhand 
1,13,866 
1,35,579 
West Bengal 
25,20,479 
49,11,387 
Andaman & Nicobar Islands 
1,189 
1,698 
Chandigarh 
- 
- 
Dadra and Nagar Haveli 
3,211 
11,437 
Daman and Diu 
73 
202 
Delhi 
516 
519 
Lakshadweep 
- 
129 
Puducherry 
760 
2,407 
Total 
2,00,31,618 
3,39,25,771 

Sources: Website of the Pradhan Mantri Ujjwala Yojana (last accessed on February 19, 2018); PRS. 

 

## Demand For Grants 2018-19 Analysis Drinking Water And Sanitation

The Ministry of Drinking Water and Sanitation is the nodal agency responsible for policy planning, funding and coordination of programs for safe drinking water and sanitation in rural areas.  The Ministry was previously a department under the Ministry of Rural Development, and was made an independent Ministry in 2011. 

Overview of finances  
In Union Budget 2018-19, the Ministry has been allocated Rs 22, 357 crore.  This is a decrease of Rs 1,654 crore (7%) over the revised estimates of 2017-18. Over the past ten years, the allocation to the Ministry of Drinking Water and Sanitation has seen an annual average increase of 9%.  This year the estimated expenditure has seen a decrease of 7%, over the revised expenditure estimates of 2017-18. Figure 1 shows these trends. Table 1 provides the budgetary allocation trends to the two major schemes, the The Ministry saw the highest increase of 49% in 2016-17, over the previous year.  National Rural Drinking Water Program (NRDWP), and the Swachh Bharat Mission-Gramin (SBM-G) of the Ministry of Drinking Water and Sanitation in the last three years. SBM-G has seen a decrease 9.5% in its allocation in 2018-19, over the revised estimates of 2017-18. NRDWP has seen a decrease of 0.7% in its allocation in 2018-19, over the revised estimates of 2017-18.  The total budget of the Ministry has seen a decrease of 7% this year. 

of Drinking Water and Sanitation ( Rs crore) 
| Revised                                                   | Budgeted    | %      | Major    |
|-----------------------------------------------------------|-------------|--------|----------|
| head                                                      |             |        |          |
| Actual                                                    |             |        |          |
| 16-17                                                     | 17-18       | 18-19  | change   |
| SBM-G                                                     | 10,484      | 16,948 | 15,343   |
| NRDWP                                                     | 5,980       | 7,050  | 7,000    |
| Secretariat                                               | 12          | 13     | 14       |
| Total                                                     | 16,476      | 24,011 | 22,357   |
| Sources: Demands for Grants 2018-19, Ministry of Drinking |             |        |          |
| Water and Sanitation; PRS.                                |             |        |          |

Figure 2 represents the key expenditure heads of 
the Ministry.  In 2018-19, 69% of the Ministry's 
expenditure is estimated to be spent on SBM-G and 
31% on NRDWP. 

In the last ten years, the allocation to rural 
sanitation and drinking water programs under the 
Ministry's budget has seen a shift.  While the 
allocation to drinking water has reduced from 87% 
in 2009-10 to 31% in 2018-19, the allocation to 
rural sanitation has increased from 13% in 2009-10 
to 69% in 2018-19. 

## Crore) Financial Allocations To Outcomes

In this section, we discuss issues regarding the implementation of the SBM-G and NRDWP. 

## Swachh Bharat Mission- Gramin

The Swachh Bharat Mission was launched on October 2, 2014 with an aim to achieve universal sanitation coverage, improve cleanliness and eliminate open defecation in the country by October 2, 2019.  The Swachh Bharat Mission- 
Gramin (SBM-G) is the rural component of the program. SBM-G was previously referred to as the Nirmal Bharat Abhiyan or the Total Sanitation Campaign. In 2018-19, it has been allocated Rs 15,343 crore, which is a decrease of 9.5% from the revised estimates of 2017-18. In 2017-18, the scheme was allocated Rs 13,948 crore, which was increased to Rs 16,948 crore at the revised estimates stage.  This implies that the revised estimates overshot the budget estimates. Figure 3 shows the expenditure on rural sanitation by the Ministry over the years. 

20,000
80%

Note: Values for 2017-18 and 2018-19 are revised estimates and budget estimates respectively. Sources: Union Budgets 2009-10 to 2018-19; PRS. 

Allocation to SBM-G has seen an increase over the years.  The rural and urban component of the scheme together got the seventh highest allocation among all the centrally sponsored schemes in Union Budget 2018-19.  However, while the allocation to the rural component witnessed a decline of 9.5%, the urban component saw an increase of 9%. Note that the total funds allocated to the scheme is low, when compared to other centrally sponsored schemes.  Allocation to some other schemes in 2018-19 such as Mahatma Gandhi National Rural Employment Guarantee Scheme is Rs 55,000 crore, National Health Mission is Rs 30,634 and Sarva Shiksha Abhiyan is Rs 26,129 crore. The required central government allocation to SBM-G for the five year period from 2014-15 to 2018-19 is Rs 1,00,447 crore.317  Of this, so far Rs 52,166 (52%) has been allocated to the scheme.  
This implies that 48% of the funds are still left to be released before October 2019. 

Budget estimates versus actual expenditure:  
Table 2 shows the trends in allocation and actual 
expenditure on rural sanitation over the past ten 
years. 

rural sanitation (Rs crore)  
| Year    | Budgeted    | Actuals    | % of Budgeted    |
|---------|-------------|------------|------------------|
| 2007-08 | 954         | 954        | 100%             |
| 2008-09 | 1,080       | 1,080      | 100%             |
| 2009-10 | 1,080       | 1,200      | 111%             |
| 2010-11 | 1,580       | 1,580      | 100%             |
| 2011-12 | 1,650       | 1,500      | 91%              |
| 2012-13 | 3,500       | 2,474      | 71%              |
| 2013-14 | 3,834       | 2,244      | 59%              |
| 2014-15 | 4,260       | 2,841      | 67%              |
| 2015-16 | 3,625       | 6,703      | 185%             |
| 2016-17 | 9,000       | 10,484     | 116%             |
| 2017-18 | 13,948      | 16,948     | 122%             |

Note: The 'utilised' figure for 2017-18 is the revised estimate. Sources: Union Budgets 2007-08 to 2017-18; PRS. 

Note that in the past three years, actual expenditure 
on SBM-G has overshot the budget estimates 
significantly.  In 2016-17, it was 116% and is 
expected to be 122% in 2017-18.  This implies lack 
of adequate budgeting and planning in 
implementation of the scheme.  

Construction of Individual Household Latrines 
(IHHLs):  For construction of IHHLs, the funds 
are shared between the centre and the state in the 
ratio of 60:40.  Under SBM-G, the cost for 
constructing a household toilet has been increased 
from Rs 10,000 to Rs 12,000.  Construction of 
IHHLs account for the largest share of total 
expenditure under the scheme.  In 2014-15, it was 
91%, and has been increased to 97% and 98% in 
2015-16 and 2016-17, respectively.  In 2017-18, 
98% of total expenditure has been on construction 
of IHHLs. 

Table 3 shows the construction of IHHLs since the 
inception of the scheme.  Although the number of 
toilets constructed each year has increased, a yearly 
% change indicates that the pace of construction of 
toilets has come down.  The increase in constructed 
toilets was 156% in 2015-16 over the previous 
year.  However, this reduced to 4% in 2017-18. 

| Year    | Toilets Constructed    | Yearly % change    |
|---------|------------------------|--------------------|
| 2014-15 | 49,00,425              | -                  |
| 2015-16 | 1,25,64,312            | 156%               |
| 2016-17 | 2,18,27,531            | 74%                |
| 2017-18 | 2,26,92,777            | 4%                 |

Note: Data for 2017-18 is updated till February 19, 2018. Sources: Management Information System Reports of SBM; PRS.  
As on February 2018, 78.8% of households in India have a toilet.318  This implies that in the next 20 months (till October 2019), 21.2% of houses will have to be provided with toilets. 

Open Defecation Free (ODF) villages:  Under SBM-G, a village is ODF when: (i) there are no visible faeces in the village, and (ii) every household as well as public/community institution uses safe technology options for faecal disposal.319 After a village declares itself ODF, states are required to carry out verification of the ODF status of such a village.  Since sanitation is a state subject, the Ministry has set some broad guidelines for ODF verification.  This includes indicators that are in accordance with the ODF verification definition, such as access to a toilet facility and its usage, and safe disposal of faecal matter through septic tanks.319  Note that according to the National Family Health Survey-4, only 37% of households in rural areas are using improved sanitation facility.320  Such a facility implies that toilets have a faecal disposal system that could include flush to piped sewer system, or flush to septic tank, or flush to pit latrine, and is not shared with any other household. villages that have declared themselves ODF free 

Table 4: ODF villages in the country 
Verified 
Verified ODF  
Year 
Declared 
ODF 
ODF 
(%) 
2015-16 
47,101 
44,767 
95% 
2016-17 
1,84,082 
1,65,303 
90% 
2017-18 
3,22,546 
2,19,979 
68% 
Total 
5,53,729 
4,30,049 
78% 
Verified 
- 
ODF 
Verified ODF 
villages (%) 
Total villages (2011) 
villages 
5,93,731 
- 
4,30,049 
72% 

Note: Data for 2017-18 is updated till February 19, 2018.  Total villages is from Census 2011. Sources: Management Information System Reports of SBM; PRS.  
Note that in 2017-18, number of villages verified as ODF has substantially come down. 

Information, Education and Communication 
(IEC) Activities:  8% of funds earmarked for SBM-G in a year are to be utilised for IEC activities.321  These activities primarily aim to mobilise behavioural change towards the use of toilets among people.  However, this has not been met. In 2014-15, Rs 157 crore was spent on such activities, accounting for 4% of the total scheme expenditure.  This decreased to 1% in 2015-16 and 2016-17.  In 2017-18, Rs 229 crore has been spent, amounting to 2% of total expenditure.  Table 5 highlights these trends. 

| Year           | SBM-G funds spent on    |
|----------------|-------------------------|
| IEC activities |                         |
| SBM-G funds    |                         |
| spent on IEC   |                         |
| activities (%) |                         |
| 2014-15        | 157 (4%)                |
| 2015-16        | 147 (1%)                |
| 2016-17        | 124 (1%)                |
| 2017-18        | 229 (2%)                |

Note: Data for 2017-18 is updated till February 19, 2018. 
Sources: Management Information System Reports of SBM; 
PRS.  
 

## National Rural Drinking Water Programme

The National Rural Drinking Water Programme 
(NRDWP) aims at assisting states in providing 
adequate and safe drinking water to the rural 
population in the country.322  Rural drinking water 
programs have existed in various forms since 1972-
73, starting with the Accelerated Rural Water 
Supply Programme, followed by a Technology 
Mission in 1986.  Subsequently, the Sector Reform 
Project was initiated in 1999-2000, with an aim to 
involve the rural community in planning, 
implementation and management of drinking water 
schemes.  From 2009, it has been renamed as the 
National Rural Drinking Water Programme. 

Fund sharing pattern:  Rural water supply is a 
state subject.  The centre-state fund sharing pattern 
within the scheme for the components of coverage 
of habitations, quality of water and operation and 
maintenance of projects is: (i) 50:50 for all states, 
and (ii) 90:10 for north-east and Himalayan states.  
For the components of monitoring and surveillance 
of water quality, sustainability of water sources, 
and support activities like awareness generation, 
the centre-state fund sharing pattern within the 
scheme is: (i) 60:40 for all states, and (ii) 90:10 for 
north-east and Himalayan states.  The centre funds 
the scheme entirely for union territories. 

NRDWP accounts for 31% of the Ministry's 
finances this year.  In 2018-19 it has been allocated 
Rs 7,000 crore, which is a decrease of 0.7% from 
the revised estimates of 2017-18.  In 2017-18, the 
scheme was allocated Rs 6,050 crore, which was 
increased to Rs 7,050 crore at the revised estimates 
stage.  This implies that the revised estimates 
overshot the budget estimates.  Figure 4 shows the 
expenditure on NRDWP by the Ministry over the 
years. 

 
Values for 2017-18 and 2018-19 are revised estimates and budget estimates respectively. Sources: Union Budgets 2009-10 to 2018-19; PRS. 

As can be noted from the figure above, from 2009- 10 to 2013-14, the expenditure on NRDWP accounted for about 80%-90% of the Ministry's budget.  However, from 2015-16 onwards, the allocation to the scheme has been reduced significantly. 

Budgeted versus actual expenditure:  Table 6 
shows the trends in allocation and actual expenditure on NRDWP over the past ten years. The actual expenditure saw a decline in 2014-15, which could be a reason for the reduction of funds at the budget estimates stage in 2015-16.  However, the actual expenditure in 2015-16 was 167% more than the budget estimates.  Note that in the past three years, actual expenditure on NRDWP has overshot the budget estimates significantly. 

NRDWP (Rs crore) 
| Year    | Budgeted    | Actuals    | % of Budgeted    |
|---------|-------------|------------|------------------|
| 2007-08 | 6,606       | 6,506      | 98%              |
| 2008-09 | 7,420       | 7,420      | 100%             |
| 2009-10 | 8,120       | 7,996      | 98%              |
| 2010-11 | 9,000       | 8,985      | 100%             |
| 2011-12 | 9,350       | 8,493      | 91%              |
| 2012-13 | 10,500      | 10,489     | 100%             |
| 2013-14 | 11,426      | 9,691      | 85%              |
| 2014-15 | 11,000      | 9,243      | 84%              |
| 2015-16 | 2,611       | 4,369      | 167%             |
| 2016-17 | 5,000       | 5,980      | 120%             |
| 2017-18 | 6,050       | 7,050      | 117%             |

Note: The 'utilised' figure for 2017-18 is the revised estimate. Sources: Union Budgets 2007-08 to 2017-18; PRS. 

The Standing Committee examining the scheme had observed that reduction in budget for NRDWP will affect the coverage and tackling of water quality problems in rural areas.323,324 
Target versus achievements:  In 2011, the Ministry came out with a strategic plan for the period from 2011-22.325  It set out a goal that by 2022, every person in rural areas in the country will 

have access to 70 Litres Per Capita Per Day 
(LPCD) of water within their household premises 
or at a distance of not more than 50 metres.  It 
identified three standards of service: 

i. 
Piped water supply with all metered, 
household connections (designed for 70 
LPCD); 
ii. 
Basic piped water supply with a mix of household connections, public taps and handpumps (designed for 55 LPCD); and  
iii. 
Handpumps, protected open wells, protected ponds, etc. (designed for 40 LPCD). 
The revised guidelines of the NRDWP in 2015 raised the drinking water supply norms from 40 LPCD to 55 LPCD.326 

Table 7 and Table 8 highlights the targets and 
achievements under the scheme for the past five 
years.  As of August 2017, 96% of rural habitations 
have access to safe drinking water327.  However, in 
term of coverage, 74% habitations are fully 
covered, and 22% habitations are partially 
covered.328 

The Ministry aims to cover 90% rural households 
with piped water supply and 80% of rural 
households with household tap connections by 
2022.  However, the Estimates Committee in its 
report in 2015 observed that piped water supply 
was available to only 47% of rural habitations, out 
of which only 15% had household tap 
connections.329   

habitations partially covered under NRDWP  
|         |              | Number of partially covered habitations    |
|---------|--------------|--------------------------------------------|
|         | Target       | Achievement                                |
| 2009-10 | 1,10,721     | 99,312 (90%)                               |
| 2010-11 | 1,10,231     | 90,116 (82%)                               |
| 2011-12 | 94,257       | 83,713 (89%)                               |
| 2012-13 | 91,750       | 77,388 (84%)                               |
| 2013-14 | 83,805       | 91,496 (109%)                              |
| 2014-15 | 89,581       | 94,020 (105%)                              |
| 2015-16 | 52,061       | 64,487 (124%)                              |
| 2016-17 | 40,391       | 43,813 (108%)                              |
| 2017-18 |              |                                            |
| 27,414  | 24,417 (89%) |                                            |

Note: Habitations where water supply systems provide less than 
55 LPCD to the population are treated as partially covered.   
Data pertain to habitations getting less than 55 LPCD of basic 
piped water supply with a mix of household connections, public 
taps and handpumps. Data for 2017-18 is updated till February 
19, 2018. 
Souces: Integrated Management Information System Reports 
2009-10 to 2017-18, National Rural Drinking Water 
Programme; PRS. 

|         |              | Number of fully covered habitations    |
|---------|--------------|----------------------------------------|
|         | Target       | Achievement                            |
| 2009-10 | 51,106       | 49,567 (97%)                           |
| 2010-11 | 33,247       | 29,267 (88%)                           |
| 2011-12 | 36,837       | 32,533 (88%)                           |
| 2012-13 | 38,403       | 58,916 (153%)                          |
| 2013-14 | 38,454       | 45,277(118%)                           |
| 2014-15 | 25,112       | 26,507 (106%)                          |
| 2015-16 | 12,081       | 13,276 (110%)                          |
| 2016-17 | 10,002       | 12,102 (121%)                          |
| 2017-18 |              |                                        |
| 5,275   | 7,853 (149%) |                                        |

Note: Data pertain to habitations getting 55 LPCD of basic piped water supply with a mix of household connections, public taps and handpumps. Data for 2017-18 is updated till February 19, 2018. Souces: Integrated Management Information System Reports 2009-10 to 2017-18, National Rural Drinking Water Programme; PRS. 

Contamination of drinking water:  It has been noted that NRDWP is over-dependant on ground water.329  However, ground water is affected by high arsenic contamination in 68 districts in 10 
317 Review of Sanitation Programme in Rural Areas, Committee on Estimates 2014-15, Lok Sabha, http://164.100.47.193/lsscommittee/Estimates/16_Estimates_8.p df. 318 Swachh Bharat Mission- Gramin, http://sbm.gov.in/sbmdashboard/IHHL.aspx. 319 Guidelines for ODF Verification, Ministry of Drinking Water and Sanitation, http://www.mdws.gov.in/sites/default/files/R_274_1441280478 318.pdf. 320 India Fact Sheet, National Family Health Survey - 4, 2015- 16, Ministry of Health and Family Welfare, http://rchiips.org/NFHS/pdf/NFHS4/India.pdf. 321 Swachh Bharat Mission- Gramin Guidelines http://www.mdws.gov.in/sites/default/files/SwachBharatGuidlin es.pdf. 322 National Rural Drinking Water Programme, Ministry of Drinking Water and Sanitation, http://indiawater.gov.in/IMISReports/MenuItems/AboutSite.asp x. 323 Demand for Grants 2016-17, Ministry of Drinking Water and Sanitation, Standing Committee on Rural Development 2015- 16, 
 

states.329  These states are Haryana, Punjab, Uttar 
Pradesh, Bihar, Jharkhand, Chhattisgarh, West 
Bengal, Assam, Manipur and Karnataka.  Table 9 
shows the number of states and districts where 
ground water is affected by various contaminants. 

## Contamination In Groundwater

| Contaminants    | Number of    |   Number of affected  |
|-----------------|--------------|-----------------------|
| affected        | districts    |                       |
| states          |              |                       |
| Arsenic         | 10           |                   68  |
| Fluoride        | 20           |                  276  |
| Nitrate         | 21           |                  387  |
| Iron            | 24           |                  297  |

Sources: Central Ground Water Board; PRS. 

Chemical contamnation of ground water has also 
been reported due to deeper drilling for drinking 
water sources.  It has been recommended that out 
of the total funds for NRDWP, allocation for water 
quality monitoring and surveillance should not be 
less than 5%.329  Presently, it is 3% of the total 
funds.326  It has also been suggested that water 
quality laboratories for water testing should be set 
up throughout the country.329

http://164.100.47.193/lsscommittee/Rural%20Development/16_
Rural_Development_23.pdf.  

324 Demand for Grants 2017-18, Ministry of Drinking Water and 
Sanitation, Standing Committee on Rural Development 2016-
17, 
http://164.100.47.193/lsscommittee/Rural%20Development/16_
Rural_Development_35.pdf.  

325  "Ensuring Drinking Water Security in Rural India", Strategic 
Plan 2011-12, Department of Drinking Water and Sanitation, 
Ministry of Rural Development, 
http://mdws.gov.in/sites/default/files/StrategicPlan_2011_22_W
ater.pdf.  

326 National Rural Drinking Water Programme Guidelines 2013, 
http://www.mdws.gov.in/sites/default/files/NRDWP_Guidelines
_2013_0.pdf. 

327 Lok Sabha Unstarred Question No. 3016, Ministry of 
Drinking Water and Sanitation, Answered on August 3, 2017, 
http://164.100.47.190/loksabhaquestions/annex/12/AU3016.pdf.  

328 Rajya Sabha Unstarred Question No. 1477, Ministry of 
Drinking Water and Sanitation, Answered on January 1, 2018. 

329 Evaluation of Rural Drinking Water Programmes, Committee 
on Estimates 2014-15, Lok Sabha, 
http://164.100.47.193/lsscommittee/Estimates/16_Estimates_2.p
df.. 

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2018