2020

## Demand For Grants 2020-21 Analysis Agriculture And Farmers' Welfare

The Ministry of Agriculture and Farmers' Welfare has two Departments: (i) Agriculture, Cooperation and Farmers' Welfare, which implements policies and programmes related to crop husbandry and farmers' welfare, and manages agriculture inputs, and (ii) Agricultural Research and Education, which coordinates and promotes agricultural research and education in the country.  This note examines the allocations to the two Departments within the Ministry and their expenditure, and discusses issues in the agriculture sector. 

## Overview Of Finances

The Ministry has been allocated Rs 1,42,762 crore in 2020-21.1  Allocation to the Ministry accounts for 5% of the central government's budget.  This allocation is 30% higher than the revised estimate for 2019-20, primarily due to a higher allocation of Rs 75,000 crore to PM-KISAN (income support scheme for farmers) for 2020-21.2  For 2019-20 as well, the scheme was allocated Rs 75,000 crore at the budgeted stage, which has now been revised down to an estimate of Rs 54,370 crore. PM-KISAN accounts for 53% of the allocation to the Ministry in 2020-21.  Other expenditure items of the Ministry, including interest subsidy for shortterm credit to farmers and Pradhan Mantri Fasal Bima Yojana, have been allocated Rs 67,762 crore in 2020-21, a 22% increase over the previous year. 

Sources:  Expenditure Budget, Union Budgets (2011-21); PRS. 

Note that the Ministry's expenditure saw a major increase in 2016-17 due to the Interest Subsidy Scheme (for providing interest subsidy on shortterm loans to farmers).  The scheme, which is being accounted under the Ministry of Agriculture since 2016-17, was under the Ministry of Finance earlier. 

## Policy Proposals In The Budget Speech

In her budget speech, the Finance Minister made the following proposals regarding agriculture: 

 The government will encourage states which undertake 
the implementation of model laws relating to land leasing, agricultural produce and livestock marketing, and contract farming. 
 The government will provide Viability Gap Funding for 
setting up warehouses at the block/ taluk level.  A Village Storage scheme has been proposed to be run by Self-Help Groups. 
 'Kisan Rail' with refrigerated coaches will be set up to 
build a seamless national cold supply chain for perishables.  'Krishi Udaan' will be launched on 
international and national routes. 
Departments:  The Department of Agriculture, Cooperation and Farmers' Welfare has received 94% of the allocation to the Ministry in 2020-21, while 6% has been allocated to the Department of Agricultural Research and Education (Table 1). 

Department 
2018-19 
Actuals 
2019-20 
Revised 
2020-21 
Budgeted 
% change 
in 2020-
21 over 
2019-20 
46,076 1,01,904 
1,34,400 
31.9% 
Agriculture, Cooperation and Farmers' Welfare 
7,544 
7,846 
8,363 
6.6% 
Agricultural Research and Education Total 
53,620 1,09,750 
1,42,762 
30.1% 

Sources:  Expenditure Budget, Union Budget 2020-21; PRS. 

The Department of Agriculture, Cooperation and Farmers' Welfare has been allocated Rs 1,34,400 crore in 2020-21, a 32% increase over the revised estimate of 2019-20.  More than 78% of the Ministry's budget is proposed to be spent on three schemes under this Department:  PM-KISAN (53%), Interest Subsidy Scheme (15%), and Pradhan Mantri Fasal Bima Yojana (11%). In 2020-21, Agricultural Research and Education has been allocated Rs 8,363 crore, a 7% increase over the revised estimate of 2019-20.3  The allocation to Indian Council of Agricultural Research (ICAR) accounts for 61% of the Department's allocation in 2020-21.  Table 6 and Table 7 in the Annexure show the major heads of allocation in the two Departments. 

Budgeted vs actual expenditure:  Expenditure by both the Departments has been lower than their budget allocations in most years during the period 2011-20 (Figure 2).  In 2019-20, the Ministry has estimated a 21% cut in expenditure as compared to the budget allocation, primarily due to Rs 20,630 
crore underspending in PM-KISAN.  The Standing Committee on Agriculture (2015-16) observed that a slow pace of utilisation of funds in the first half of the financial year results in a cut in allocation for the rest of the year, which leads to underspending.4 
Sources:  Expenditure Budget, Union Budgets (2011-20); PRS. 

Issues in the sector 

## Growth Of The Agriculture Sector

Growth of the sector comprising of agriculture and allied activities has been volatile over the years (Figure 3).  In 2019-20, the sector is estimated to grow at 2.8%, as compared to 2.9% in 2018-19. 

Sources:  Agricultural Statistics at a Glance 2017, Ministry of Agriculture and Farmers' Welfare; CSO, MOSPI; PRS. 

The contribution of the agriculture sector in the economy has significantly decreased from 51% in 1951 to 19% in 2011.  As per the Economic Survey 2019-20, this has declined to 16.5% in 2019-20.5 Meanwhile, the share of workers who are dependent on agriculture has decreased at a lower rate from 70% in 1951 to 55% in 2011.  This implies that the average income of these workers grew at a slower pace than that of workers in other sectors.  The Committee on Doubling Farmers' Income (Chair: Mr. Ashok Dalwai, 2017) observed that one way of significantly improving income of farmers is by shifting the agricultural workforce to more productive employment in non-farm sectors.6 

## Income Support To Farmers

The PM-KISAN scheme was launched in February 2019 to provide income support of Rs 6,000 per year (disbursed in three instalments of Rs 2,000) to farmer families with the aim of supplementing their financial needs in procuring inputs for appropriate crop health and yields.7 Earlier, only small and marginal landholder farmer families, i.e. families with total cultivable landholding of up to two hectares, were eligible for the scheme.  In May 2019, the Union Cabinet approved extension of the scheme to all farmer families irrespective of their size of landholdings. With this increase in coverage, expenditure on the scheme was estimated to increase from Rs 75,000 crore to Rs 87,218 crore in 2019-20.8  However, allocation to the scheme for 2019-20 has been cut down from Rs 75,000 crore at the budgeted stage to Rs 54,370 crore at the revised stage.  Till December 13, 2019, Rs 29,877 crore was released under the scheme for the year 2019-20.9 Further, in 2018-19, of the estimated Rs 20,000 
crore expenditure under the scheme, only Rs 1,241 crore (6.2% of the budget allocation) was spent. 

Implementation:  Initially, the scheme was expected to cover 12.5 crore beneficiaries.8  With the increase in coverage, the revised number of beneficiaries are estimated to be 14.5 crore.8  As on February 11, 2020, 8.9 crore beneficiaries have been covered under the scheme. 10  However, the number of beneficiaries reached under different instalments vary.  The number of beneficiaries under the four instalments disbursed so far is as follows: (i) 8.5 crore (December 2018-March 2019), (ii) 7.6 crore (April-July 2019), (iii) 6.2 crore (August-November 2019), and (iv) 3.1 crore (December 2019-March 2020).  State-wise details are given in Table 9 in the Annexure. The Standing Committee on Agriculture (2019-20) noted that the issues being faced in the implementation of the scheme are: (i) nonavailability of proper land records in many states, (ii) slow pace of identification of beneficiaries and uploading of data by states, (iii) issues with matching of demographic data between PM-
KISAN database and Aadhaar data, (iv) incorrect bank accounts, and (v) poor internet connectivity in rural areas hampering the uploading of data.11  The Committee recommended that the government enhance coordination with states where enrolment is slow and take corrective steps.   
Land as an eligibility criterion:  Farmer families which own cultivable landholding are eligible for receiving income support under the scheme.  The beneficiaries are identified by states based on their land records.  The scheme does not cover landless agricultural labourers who form 55% of the agricultural workers in the country (Figure 5).12 Agricultural workers include cultivators and labourers working in the agriculture sector.  The share of landless agricultural labourers in total agricultural workers has increased over the years from 28% in 1951 to 55% in 2011.  The share of cultivators has reduced from 72% to 45% during the same period. 

## Agricultural Credit

Agriculture credit is provided to farmers at a subsidised cost through the Interest Subsidy scheme.13  Under the scheme, interest subsidy of two percent is provided to farmers on their shortterm crop loans of up to three lakh rupees.  An additional interest subsidy of three percent is provided to farmers repaying their loan on time (within a year). In 2020-21, the scheme has been allocated Rs 21,175 crore, an 18.5% increase over the 2019-20 revised estimates. 

Inadequate allocation for unsettled claims:  The Standing Committee on Agriculture (2017) noted that the budget allocation to the scheme has been inadequate.42  It observed that, in 2018-19, against an estimated requirement of Rs 41,748 crore for unsettled claims (including past claims), Rs 15,000 crore (36%)  was allocated.  Of this, Rs 13,046 crore was spent hence, leaving Rs 28,702 crore as unsettled claims.  
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 the Interest Subsidy Scheme for short-term crop loans discriminates against longterm loans.14  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.  The Committee observed that the scheme does not incentivise long-term capital formation in agriculture, which is essential to boost productivity in the sector. The share of long-term loans in total agricultural credit declined between 2006-07 (40%) and 2012- 13 (22%)  (Figure 6).15  However, the share has increased to 35% in 2016-17.  A low share of longterm loans in agricultural credit implies that farmers are taking loans for recurring expenditures rather than to fund long-term investments. 

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

An Internal Working Group under the RBI (2015) observed that the Interest Subsidy scheme has distorted the agricultural credit system.16  Further, it stated that banks granted loans under the scheme without establishing that the loans are for agriculture, and claiming interest subsidy as well as priority sector benefit. 

Land ownership: The RBI Committee (2015) 
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.14  The Committee recommended that agricultural credit must flow to the actual cultivator for which substantial reform is necessary.14  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 (2016) also recommended the transfer of benefits to farmers directly, instead of subsidy and waivers.17 Considering that access to agricultural credit is linked to formal land titles, the RBI Committee (2015) recommended that credit eligibility certificates, which would act as tenancy or lease certificates, should be issued to tenant farmers.14 These certificates would enable landless tenant cultivators to obtain agricultural credit. An Internal Working Group of the RBI constituted to review Agricultural Credit (2019) noted that the absence of a proper land leasing framework and a lack of land records inhibited access to institutional credit.  It recommended that the centre should encourage the states to digitise and update land records in a timebound manner.19 
Small and marginal farmers:  Farmers with landholdings of less than a hectare primarily borrow from informal sources of credit such as moneylenders, whereas those with landholdings of two or more hectares primarily borrow from banks (Figure 7).14  Informal sources of credit are typically offered at higher rates of interests, and may not have proper documentation. Note that 68% of the agricultural landholdings in the country belong to the marginal (less than one hectare) category.18  Another 18% belong to the small (between one to two hectare) category. Further, the share of the marginal category in total agricultural landholdings has been increasing over the years, from 51% in 1970-71 to 68% in 2015-16. The Internal Working Group of the RBI to Review Agricultural Credit (2019) observed that only 41% of small and marginal farmers had been covered by banks.  It recommended that bank lending targets to small and marginal farmers be revised upwards from the existing 8% to 10%.19 

## Crop Insurance

Crop insurance is provided to farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY).20 The scheme covers all farmers, including tenant farmers and sharecroppers, who are growing notified crops in notified areas.  In 2020-21, the scheme has been allocated Rs 15,695 crore, a 15% increase over the 2019-20 revised estimate.  Issues related to crop insurance raised over the years are: 
Awareness about crop insurance:  The Economic Survey 2018-19 noted that the share of agricultural households insuring their crops was low.21  Less than 5% of the agricultural households cultivating major crops, such as rice and wheat, insured crops. Lack of awareness about crop insurance among farmers was the major factor for not insuring their crops.  Further, lack of awareness about availability of crop insurance programmes was another reason. 

The Standing Committee on Finance (2016) recommended that awareness should be created about what crops should be grown based on factors such as soil quality and incidence of rainfall.22 
Coverage of farmers:  In 2018-19, 5.18 crore farmers were insured under the scheme.23  Note that PMFBY is mandatory for farmers with loans and optional for those without loans.20  Majority (73%) of the farmers had to compulsorily enrol under the scheme, whereas 27% were non-loanee farmers. The Comptroller and Auditor General of India (2017) observed a low coverage of farmers without loans under the previous crop insurance schemes. It recommended the Ministry to ensure coverage of more farmers including those without loans.24 
Assessment of losses:  The Standing Committee on Agriculture (2017) observed that the state governments are not readily accepting and adopting the use of technology for assessing yield loss.  It also observed that crop cutting experiments are not being carried out diligently.42  The Committee recommended that the Ministry 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.  The Standing Committee on Agriculture (2017) recommended that an institutional mechanism be put in place to monitor faster settlement of pending claims.42 

 
The Ministry revised the operational guidelines of 
the scheme in September 2018 (effective from the Rabi season 2019-20).25  The revised operational guidelines specify penalties for state governments and insurance companies in case of a delay in settlement of claims.  Insurance companies are required to pay farmers 12% interest on the claim amount in case of a delay beyond two months. Further, states are required to pay 12% interest for a delay in release of their share of premium. 

## Minimum Support Prices (Msps)

MSP is the price at which the government agencies purchase farmers' produce of certain notified crops. The Finance Minister in the 2019-20 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.26  This production cost, A2+FL, includes costs of inputs such as seeds and fertilisers, 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.27  
The procurement is also largely from a few states. Three states (Haryana, Madhya Pradesh, and Punjab) which produce 45% of the wheat in the country account for 81% of its procurement.28      
For paddy, six states (Andhra Pradesh, Chhattisgarh, Haryana, Odisha, Punjab, and Telangana) with 38% of production have 82% share in procurement.28 Other issues with the implementation of MSPs 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.29  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 MSPs. In September 2018, the Union Cabinet approved the PM-AASHA scheme for procurement of crops from farmers.30  The scheme provides states with the option to opt for another procurement mechanism (price deficiency payment system). This mechanism does not involve any physical procurement of crops.  Direct payment of the difference between the MSPs and the selling/modal prices of the crops will be made to pre-registered farmers in their bank accounts.  Farmers who sell their crops in the notified market yards through a transparent auction process will be eligible. 

## Irrigation

As of 2014-15, 49% of the country's net sown area was under irrigation.31  The remaining agricultural area in the country depends on rainfall.  Major irrigation sources for agriculture include tubewells (46%) and other wells (17%), and canals (24%).32 Sources such as canals and tubewells use the flood irrigation technique, where water is allowed to flow in the field and seep into the soil.33  This results in wastage of water since excess water seeps into the soil or flows off the surface without being utilised. 

It has been recommended that farmers move from flood irrigation to micro-irrigation (drip or sprinkler irrigation systems) to conserve water.34 
Agriculture and Farmers' Welfare; PRS. 

The Pradhan Mantri Krishi Sinchai Yojana (PMKSY) was launched in 2015 to increase the coverage of the irrigated area.35  The Ministry implements the 'Per Drop More Crop' component under the scheme to increase water efficiency through micro-irrigation and other interventions. In 2020-21, Rs 4,000 crore has been allocated for the scheme, a 97% increase over the revised estimates of 2019-20.  During the 2013-20 period, 50.7 lakh hectares (ha) of the area has been covered under micro-irrigation (Table 2).36 

lakh hectares under PMKSY 
| Year     |   Target  |   Achievement  | In %    |
|----------|-----------|----------------|---------|
| 2013-14  |       6.6 |            4.3 | 65%     |
| 2014-15  |       5.7 |            4.2 | 74%     |
| 2015-16  |       5   |            5.7 | 114%    |
| 2016-17  |       8   |            8.4 | 105%    |
| 2017-18  |      12   |           10.5 | 88%     |
| 2018-19  |      16   |           11.6 | 73%     |
| 2019-20* |      14   |            6   | 43%     |
| Total    |      67.3 |           50.7 | 75%     |

Note: Data as of February 14, 2020. Sources: Website of Pradhan Mantri Krishi Sinchai Yojana, as accessed on February 5, 2020; PRS. 

Shortfall in funds:  Allocation to the scheme has been increasing over the years, but it is revised down at later stages (Table 3).42  Allocation to the scheme in 2019-20 has been revised down by 42% from Rs 3,500 crore (BE) to Rs 2,032 crore (RE). 

PMKSY under the Ministry (in Rs crore) 
| Year         | Budgeted    | Actual    | % shortfall    |
|--------------|-------------|-----------|----------------|
| 2015-16      | 1,800       | 1,556     | 14%            |
| 2016-17      | 2,340       | 1,991     | 15%            |
| 2017-18      | 3,400       | 2,819     | 17%            |
| 2018-19      | 4,000       | 2,918     | 27%            |
| 2019-20 (RE) | 3,500       | 2,032     | 42%            |

Note: Figure for 2019-20 are Revised Estimates. Sources: Expenditure Budget, Union Budgets (2015-20); PRS. 

 

## Soil Health And Fertilisers

While the Department of Fertilisers under the Ministry of Chemicals and Fertilisers is responsible for monitoring the production, distribution, and prices of fertilisers, the Department of Agriculture, Cooperation and Farmers' Welfare is responsible for the promotion of balanced use of fertilisers.37 Balanced use refers to the use of a proper combination of various nutrients and other micronutrients.  Three major nutrients are primarily used: Nitrogen (N), Phosphatic (P), and Potassic (K). The government subsidises fertilisers through: (i) subsidy for urea (containing N fertiliser), and (ii) nutrient-based subsidy for P and K fertilisers. Rs 71,309 crore is allocated to the Department of Fertilisers for fertiliser subsidy in 2020-21, an 11% decrease (Rs 8,689 crore) over the 2019-20 revised estimate (Table 4).  

Subsidy 
2018-19 
Actuals 
2019-20 
Revised 
2020-21 
Budgeted 
% change 
in 2020-
21 over 
2019-20 
Urea 
46,514 
53,629 
47,805 
-10.9% 
Nutrient based 
24,090 
26,369 
23,504 
-10.9% 
Fertiliser subsidy 
70,604 
79,998 
71,309 
-10.9% 

Sources:  Expenditure Budget, Union Budget 2020-21; PRS. 

Prices of urea are controlled by the government, whereas the prices of P and K fertilisers are market-driven.37  This has led to the lower prices of urea (N) over the years, whereas market prices of P and K fertilisers have remained higher.  This is one of the reasons for imbalanced use of nutrients as urea is used more than other fertilisers.37  While the recommended ratio of use of the N, P, and K fertilisers is 4:2:1, this ratio in India in 2016-17 was at 6.7:2.7:1.38  Details of consumption of N, P, and K fertilisers are given in Table 8 in the Annexure. Overuse of fertilisers could lead to an imbalance of nutrients in the soil and deteriorate the soil quality. The Standing Committee on Agriculture (2015) observed that use of fertilisers in the country was not based on scientific analysis of soil due to near absence of soil testing facilities, low awareness, and over-reliance on urea.38 In order to provide farmers with information regarding the quality of their soil, the Soil Health Card scheme was launched in 2015.  Under the Soil Health Card scheme, farmers are issued soil health cards, which contain information such as nutrient status of soil and recommended dose of nutrients to be provided to improve its fertility. Rs 315 crore has been allocated for the National Project on Soil Health and Fertility in 2020-21, a 102% increase over the revised estimates of 2019- 20.  During the first cycle (2015-17) of the scheme, 10.74 crore soil health cards were provided.39 
During the year 2019-20, 12.4 lakh Soil Health Cards were distributed to farmers under Model Village Project.40 

## Rashtriya Krishi Vikas Yojana

The umbrella scheme was initiated in 2007 for ensuring holistic development of agriculture and allied sectors by allowing states to choose their own development activities as per district and state agriculture plans.41 With the aim of making farming a remunerative economic activity, the Ministry provides financial assistance to states to spend on sub-schemes such as: (i) pre-harvest and post-harvest infrastructure, (ii) value addition using agribusiness models, and (iii) projects based on local and national priorities. Rs 3,700 crore has been allocated to the scheme for 2020-21, a 34% increase over the 2019-20 revised estimate.  The Standing Committee on Agriculture (2017) observed that allocations are not utilised optimally and timely. This is due to delay in the approval of projects and funds by states and consequent slow progress of implementation, causing a reduction in the release of funds.42  For instance, in 2019-20, the scheme was allocated Rs 3,745 crore at the budgeted stage, which has been cut down by 26% to Rs 2,760 crore as per the revised estimates. 

## Horticulture

Between 2001-02 and 2018-19, the production of horticulture crops increased from 146 million tonnes to 312 million tonnes (Figure 10).43  This implies that the horticulture production increased at an average rate of 4.9%.  Production of food grains increased at a rate of 1.7% during the same period. 

Sources:  Horticulture Statistics at a Glance 2018, Ministry of Agriculture and Farmers' Welfare; PRS. 

In 2018-19, fruits and vegetables contributed to 31% and 59% of the total horticultural production respectively.  The National Mission on Horticulture seeks to promote horticulture by providing availability of quality inputs such as planting material, and post-harvest interventions such as reduction in losses and access to markets.  In 2020-
21, the scheme has been allocated Rs 2,300 crore, which is 45% more than the revised estimate of 
2019-20. Over the past few years, the actual expenditure under horticulture has been lower than the budgeted allocation, except in 2013-14 (Table 5).  

## Schemes And Centrally Sponsored Schemes On Horticulture (In Rs Crore)

| Year      | Budgeted    | Actual    |
|-----------|-------------|-----------|
| Budget vs |             |           |
| Actual    |             |           |
| 2012-13   | 2,212       | 1,860     |
| 2013-14   | 2,556       | 2,857     |
| 2014-15   | 2,263       | 1,959     |
| 2015-16   | 2,000       | 1,699     |
| 2016-17   | 1,620       | 1,496     |
| 2017-18   | 2,329       | 2,035     |

Sources:  Horticulture Statistics at a Glance 2018, Ministry of Agriculture and Farmers' Welfare; 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) market research and information network, (iii) strengthening of Agmark grading facilities, (iv) agro-business development to provide market linkages to farmers, and (v) e-NAM (National Agriculture Market), which is a national electronic market platform on which farmers can sell their produce. In 2020-21, the scheme has been allocated Rs 490 crore.  This is 48% higher than the 2019-20 revised estimate.  However, the allocation in 2019-20 has been revised down by 45%, from Rs 600 crore to Rs 331 crore.  As of January 2019, 585 mandis across 18 states were integrated with e-NAM.44 
APMCs:  Agriculture marketing in most states is regulated by the Agriculture Produce Marketing Committees (APMCs) established by state governments.  The Standing Committee on Agriculture (2018) observed that small and marginal farmers face various issues in selling their produce in APMC markets such as inadequate marketable surplus, long-distance to nearest APMC markets, and lack of transportation facilities.  Most farmers lack access to government procurement facilities including APMC markets.44 The Committee observed that provisions of the APMC Acts are not implemented in their true sense, due to reasons such as: (i) limited number of traders in APMC markets thereby reducing competition, (ii) cartelisation of traders, and (iii) undue deductions in the form of commission charges and market fee.44  It observed that APMC Acts need to be reformed urgently.  The Acts are highly restrictive in promotion of multiple channels of marketing and competition in the system. 

## 15Th Finance Commission'S Recommendations On Agricultural Reforms

The 15th Finance Commission, in its report for 2020-21, 
proposed certain criteria for providing performance-linked 
incentives to states.  The Commission included the 
implementation of agricultural reforms as one of the 
criterion.  States would be eligible for certain financial 
incentives if they enacted and implemented the features of: 
(i) The Model Agricultural Produce and Livestock Marketing 
(Promotion and Facilitation) Act, 2017, (ii) The Model 
Agricultural Produce and Livestock Contract Farming and 
Services (Promotion and Facilitation) Act, 2018, and (iii) The 
Model Agricultural Land leasing Act, 2016.45 

The Model Agricultural Produce and Livestock 
Marketing (Promotion and Facilitation) Act, 2017: The 
Act aims to create a single agricultural market for 
agricultural produce and livestock.  It seeks to remove 
intermediaries by integrating farmers, exporters, consumers 
and others in a single supply chain and by promoting a 
direct interface between producers and consumers.  The 
Act aims to encourage e-trading to promote both 
transparency and integration of markets within each 
State/UT.  Inter-state trading license, grading and 
standardization and quality certification are provided for with 
an aim to promote a national market for agricultural produce 
and livestock. 

The Model Agricultural Produce and Livestock Contract 
Farming and Services (Promotion and 
Facilitation) Act, 2018: The Act aims to facilitate contract 
farming to improve production and marketing of agricultural 
produce and livestock.  It constitutes "Registering and 
Agreement Recording Committee" at District, Block or 
Taluka level.  It seeks to support contracting farmers by 
providing insurance cover and purchasing agricultural 
produce as per the contract.  The Act aims to expand 
contract farming to small and marginal farmers through the 
promotion of Farmer Producer Organisation or Companies. 

The Model Agricultural Land Leasing Act, 2016: The Act 
aims to improve access to land by landless and marginal 
farmers by permitting and facilitating the leasing of 
agricultural land.  It legalises land leasing in all areas.  The 
Act provides for the automatic resumption of the land after 
the lease period and removes the clause of adverse 
possession of the land.  It promotes access to institutional 
loans, insurance and relief to tenants and sharecroppers. 

## Agricultural Research

The Indian Council of Agricultural Research (ICAR) has been allocated Rs 5,138 crore for the year 2020-21.  This is 5.5% higher than the revised estimate of 2019-20.  The allocation is primarily for salaries, pensions and administrative expenses and support for different schemes under ICAR. Research under crop sciences and animal sciences have been allocated Rs 965 crore and Rs 486 crore in 2020-21.  Observing that vegetable oils, pulses, cashew are among the major commodities imported between 2011 and 2016, the Standing Committee on Agriculture (2017) observed that there is a need for enhancing the production of these commodities.46  It also recommended the central government to allocate additional funds to ICAR 
for this purpose. The Committee noted that the production of animal vaccine is inadequate in the country.  It recommended that adequate resources and manpower must be devoted to ICAR for the development of animal vaccines. 

International comparison:  The Committee on Doubling Farmers' Income (Chair:  Mr. Ashok Dalwai, 2018) observed that the expenditure on agricultural research in India has remained around 0.3-0.4% of the agriculture GDP since 2001 
https://www.indiabudget.gov.in/doc/eb/sbe2.pdf. 4 Report no. 25, Standing Committee on Agriculture: 'Demand for Grants (2016-17), Department of Agriculture, Cooperation and Farmers' Welfare', Lok Sabha, May 2016, http://164.100.47.193/lsscommittee/Agriculture/16_Agriculture_ 25.pdf. 5 Agriculture and Food Management, Economic Survey 2019- 20, India Budget website, January 31, 2020, https://www.indiabudget.gov.in/economicsurvey/doc/echapter_v ol2.pdf. 6 "Status of Farmers' Income: Strategies for Accelerated Growth", Report of the Committee on Doubling Farmers' 
Income, Ministry of Agriculture and Farmers Welfare, August 2017, http://farmer.gov.in/imagedefault/DFI/DFI%20Volume%202.pd f. 7 Operational Guidelines of "Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)", Ministry of Agriculture and Farmers Welfare, http://agricoop.gov.in/sites/default/files/operational_GuidePM.p df. 

8 "PM-KISAN Scheme extension to include all eligible farmer families irrespective of the size of landholdings", Press Information Bureau, Cabinet, May 31, 2019. 9 Rajya Sabha Unstarred Question No. 2899, Ministry of Agriculture and Farmers' Welfare, December 13, 2019, https://pqars.nic.in/annex/250/AU2899.docx. 10 PM-KISAN Dashboard, Ministry of Agriculture and Farmers' Welfare, As on February 11, 2020, https://www.pmkisan.gov.in/StateDist_Beneficiery.aspx. 11 Report no. 6, Standing Committee on Agriculture: 'Demand for Grants (2019-20), Department of Agriculture, Cooperation and Farmers' Welfare', Lok Sabha, December 2019, http://164.100.47.193/lsscommittee/Agriculture/17_Agriculture_ 6.pdf. 12 "March of Agriculture since Independence and Growth Trends", Report of the Committee on Doubling Farmers' 
Income, Ministry of Agriculture and Farmers Welfare, August 2017, http://farmer.gov.in/imagedefault/DFI/DFI%20Volume%201.pd f. 13 "Cabinet approves Interest Subvention to banks on short-Term crop loans to farmers", Press Information Bureau, Ministry of Agriculture and Farmers' Welfare, June 14, 2017. 14 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/FFIRA27
(except in 2011 when it was 0.52% because of higher plan allocations by the government).47 The Committee observed that this is substantively lower in comparison to many developed countries, and also vis-à-vis comparable developing economies.  The share of agricultural research in agriculture GDP is much higher in Brazil (1.8%), Mexico (1.05%), Malaysia (0.99%), and China (0.62%).  It observed that in the high-income countries, the share stands at 3.01%.  The Committee recommended that expenditure on agricultural research should be increased to upto one percent of agriculture GDP. 

16 Report of the Internal Working Group to Revisit the Existing Priority Sector Lending Guidelines, Reserve Bank of India, March 2, 2015, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/PSGRE0 20315.pdf. 17 Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, Reserve Bank of India, January 2016, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/CFS0701 14RFL.pdf. 18 Agriculture Census 2015-16 (provisional), Ministry of Agriculture and Farmers Welfare, September 2018, https://agcensus.nic.in/document/agcen1516/T1_ac_2015_16.pd f. 19 Report of the Internal Working Group to Review Agricultural Credit, Reserve Bank of India, September 2019, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/WGREP ORT101A17FBDC144237BD114BF2D01FF9C9.PDF. 20 "Pradhan Mantri Fasal Bima Yojana (PMFBY), Ministry of Agriculture, http://agricoop.nic.in/imagedefault/whatsnew/sch_eng.pdf; "Cabinet approves New Crop Insurance Scheme - Pradhan Mantri Fasal Bima Yojana", Press Information Bureau, Ministry of Agriculture, January 13, 2016. 21 Agriculture and Food Management, Economic Survey 2018- 19, January 2018, https://mofapp.nic.in/economicsurvey/economicsurvey/pdf/099- 119_Chapter_07_Economic_Survey_2018-19.pdf. 22 Report no. 34, Standing Committee on Finance: 'State of rural/agricultural banking and crop insurance', August 2016, http://164.100.47.134/lsscommittee/Finance/16_Finance_34.pdf. 23 Lok Sabha Starred Question No. 17, Ministry of Agriculture and Farmers Welfare, December 11, 2018, http://loksabhadocs.nic.in/loksabhaquestions/annex/16/AS17.pdf . 24 Report no.7, Performance audit of Agriculture Crop Insurance Schemes, Comptroller And Auditor General of India, July 2017, https://cag.gov.in/sites/default/files/audit_report_files/Report_N o.7_of_2017_- _Performance_audit_Union_Government_Agriculture_Crop_Ins urance_Schemes_Reports_of_Agriculture_and_Farmers_Welfar e.pdf. 25 "Government modifies operational guidelines for Pradhan Mantri Fasal Bima Yojna (PMFBY)", Press Information Bureau, Ministry of Agriculture and Farmers Welfare, September 2018. 26 Budget Speech 2019-20, Union Budget 2019-20, February 1, 2018, https://www.indiabudget.gov.in/doc/bspeech/bs201819.pdf. 

                                                                                                                                                                                     
34 Natural Resource Management, State of Indian Agriculture 2015-16, Ministry of Agriculture and Farmers' Welfare, May 2016, http://agricoop.nic.in/imagedefault/state_agri_1516.pdf. 35 State of Indian Agriculture 2015-16, Ministry of Agriculture and Farmers Welfare, http://eands.dacnet.nic.in/PDF/State_of_Indian_Agriculture,2015-16.pdf. 36 Website of Pradhan Mantri Krishi Sinchai Yojana, as accessed on February 5, 2020, https://pmksy.gov.in/mis/frmDashboard.aspx. 37 Report no. 43, Standing Committee on Chemicals and Fertilisers: 'Demand for Grants (2019-20), Department of Fertilisers', Lok Sabha, March 2018, http://164.100.47.193/lsscommittee/Chemicals%20&%20Fertilizers/16_Chemicals_And_Fertilizers_43.pdf. 38 Report no. 29, Standing Committee on Agriculture: 'Impact of Chemical Fertilizers and Pesticides on Agriculture and allied sectors in the country', August 2016, http://164.100.47.134/lsscommittee/Agriculture/16_Agriculture_29.pdf. 39 Lok Sabha Unstarred Question No. 453, Ministry of Agriculture and Farmers' Welfare, June 25, 2019, http://164.100.24.220/loksabhaquestions/annex/171/AU453.pdf. 40 "Year End Review 2019 - Ministry of Agriculture, Cooperation and Farmers Welfare", Press Information Bureau, Ministry of Agriculture and Farmers Welfare, January 7, 2020. 41 Revised guidelines, Rashtriya Krishi Vikas Yojana, Department of Agriculture, Cooperation and Farmers' Welfare, https://rkvy.nic.in/static/download/pdf/RKVY_14th_Fin._Comm.pdf. 42 Report no. 35, Standing Committee on Agriculture: 'Demand for Grants (2018-19), Department of Agriculture, Cooperation and Farmers' Welfare', Lok Sabha, March 2017, http://164.100.47.193/lsscommittee/Agriculture/16_Agriculture_35.pdf. 43 Horticulture Statistics at a Glance 2017, Ministry of Agriculture and Farmers Welfare, http://agricoop.gov.in/sites/default/files/Horticulture%20At%20a%20Glance%202017%20for%20net%20uplod%20%282%29.pdf. 44 Report no. 62, Standing Committee on Agriculture: 'Agriculture Marketing and Role of Weekly Gramin Haats', Lok Sabha, January 2019, http://164.100.47.193/lsscommittee/Agriculture/16_Agriculture_62.pdf. 45 15th Finance Commission Report for the Year 2020-21, Finance Commission website, https://fincomindia.nic.in/ShowPDFContent.aspx. 46 Report no. 36, Standing Committee on Agriculture: 'Demand for Grants (2018-19), Department of Agricultural Research and Education', Lok Sabha, March 2017, http://164.100.47.193/lsscommittee/Agriculture/16_Agriculture_36.pdf. 47 "Science for Doubling Farmers' Income", Report of the Committee on Doubling Farmers' Income, Ministry of Agriculture and Farmers Welfare, February 2018, http://farmer.gov.in/imagedefault/DFI/DFI%20Vol-12A.pdf. DISCLAIMER: This document is being furnished to you for your information.  You may choose to reproduce or redistribute this report for non-commercial purposes in part or in full to any other person with due acknowledgement of PRS Legislative Research ("PRS").  The opinions expressed herein are entirely those of the author(s).  PRS makes every effort to use reliable and comprehensive information, but PRS does not represent that the contents of the report are accurate or complete.  PRS is an independent, not-for-profit group.  This document has been prepared without regard to the objectives or opinions of those who may receive it. 

## Annexure Allocation To Major Expenditure Heads Under The Departments

and Farmers' Welfare in 2020-21 (Rs crore) 
 
2018-19 
Actuals 
2019-20 
Budgeted 
2019-20 
Revised 
2020-21 
Budgeted 
% change in RE 
of 2019-20 over 
BE of 2019-20 
% change in BE 
of 2020-21 over 
RE of 2019-20 
PM-KISAN 
1,241 
75,000 
54,370 
-27.5% 
75,000 
37.9% 
Interest subsidy for short-term credit to farmers 
11,496 
18,000 
17,863 
-0.8% 
21,175 
18.5% 
Pradhan Mantri Fasal Bima Yojana 
11,937 
14,000 
13,641 
-2.6% 
15,695 
15.1% 
Pradhan Mantri Krishi Sinchai Yojana (Per Drop More Crop) 
2,918 
3,500 
2,032 
-41.9% 
4,000 
96.8% 
Market intervention scheme and price support scheme (MIS-PSS)* 
1,400 
3,000 
2,010 
-33.0% 
2,000 
-0.5% 
PM-AASHA 
4,721 
1,500 
321 
-78.6% 
500 
55.8% 
Pradhan Mantri Kisan Man Dhan Yojana 
- 
900 
200 
-77.8% 
220 
10.0% 
Green Revolution 
11,758 
12,561 
9,965 
-20.7% 
13,320 
33.7% 
       Rashtriya Krishi Vikas Yojna 
3,370 
3,745 
2,760 
-26.3% 
3,700 
34.1% 
       National Mission on Horticulture 
1,997 
2,225 
1,584 
-28.8% 
2,300 
45.2% 
       National Food Security Mission 
1,606 
2,000 
1,777 
-11.2% 
2,100 
18.2% 
Department 
46,076 
1,30,485 
1,01,904 
-21.9% 
1,34,400 
31.9% 

*for procurement of pulses and oilseeds Sources:  Demand no. 1, Expenditure Budget, Union Budget 2020-21; PRS.   

Education in 2020-21 (Rs crore) 
 
2018-19 
Actuals 
2019-20 
Budgeted 
2019-20 
Revised 
2020-21 
Budgeted 
% change in RE 
of 2019-20 over 
BE of 2019-20 
% change in BE 
of 2020-21 over 
RE of 2019-20 
ICAR headquarters 
5,056 
4,869 
4,869 
0.0% 
5,138 
5.5% 
Crop sciences 
868 
934 
859 
-8.1% 
965 
12.3% 
Agricultural education 
761 
819 
688 
-16.0% 
740 
7.6% 
Animal sciences 
421 
453 
452 
-0.2% 
486 
7.4% 
Department 
7,544 
8,079 
7,846 
-2.9% 
8,363 
6.6% 

Sources:  Demand no. 2, Expenditure Budget, Union Budget 2020-21; PRS. 

## Consumption Of Fertilisers

| Year    |   Urea (N)  |   Phosphatic (P)  |   Potassic (K)  |   Total (N+P+K)  |
|---------|-------------|-------------------|-----------------|------------------|
| 2005-06 |       127.2 |              52   |            24.1 |            203.4 |
| 2006-07 |       137.7 |              55.4 |            23.3 |            216.5 |
| 2007-08 |       144.2 |              55.1 |            26.4 |            225.7 |
| 2008-09 |       150.9 |              65.1 |            33.1 |            249.1 |
| 2009-10 |       155.8 |              72.7 |            36.3 |            264.9 |
| 2010-11 |       165.6 |              80.5 |            35.1 |            281.2 |
| 2011-12 |       173   |              79.1 |            25.8 |            277.9 |
| 2012-13 |       168.2 |              66.5 |            20.6 |            255.4 |
| 2013-14 |       167.5 |              56.3 |            21   |            244.8 |
| 2014-15 |       169.4 |              60.9 |            25.3 |            255.8 |
| 2015-16 |       173.7 |              69.8 |            24   |            267.5 |
| 2016-17 |       167.4 |              67.1 |            25.1 |            259.5 |
| 2017-18 |       169.6 |              68.5 |            27.8 |            265.9 |

Sources:  Agricultural Statistics at a Glance 2018, Ministry of Agriculture and Farmers' Welfare; PRS. 

## Implementation Of Pm-Kisan

recipients (As on February 11, 2020) 
| First                        | Second           | Third           | Fourth          |
|------------------------------|------------------|-----------------|-----------------|
| State                        |                  |                 |                 |
| Number of                    |                  |                 |                 |
| Instalment                   | Instalment       | Instalment      | Instalment      |
| Beneficiaries                |                  |                 |                 |
| (Dec 18-Mar 19)              | (Apr 19-July 19) | (Aug 19-Nov 19) | (Dec 19-Mar 20) |
| Andaman and  Nicobar Islands | 16,584           | 16,504          | 15,909          |
| Andhra Pradesh               | 51,54,980        | 51,17,781       | 41,75,957       |
| Arunachal  Pradesh           | 56,628           | 50,820          | 42,529          |
| Assam                        | 31,07,195        | 27,04,200       | 24,14,304       |
| Bihar                        | 54,98,078        | 53,48,465       | 47,02,794       |
| Chandigarh                   | 457              | 457             | 425             |
| Chhattisgarh                 | 19,81,216        | 18,80,819       | 16,54,160       |
| Dadra and Nagar Haveli       | 10,564           | 10,435          | 10,309          |
| Daman and Diu                | 3,587            | 3,463           | 3,372           |
| Delhi                        | 13,727           | 12,479          | 11,468          |
| Goa                          | 8,339            | 7,248           | 6,278           |
| Gujarat                      | 47,88,238        | 48,26,236       | 47,01,941       |
| Haryana                      | 15,42,748        | 14,54,111       | 14,37,275       |
| Himachal Pradesh             | 8,75,212         | 8,63,955        | 8,43,492        |
| Jammu and Kashmir            | 9,57,049         | 9,30,696        | 8,84,219        |
| Jharkhand                    | 15,15,528        | 14,52,601       | 7,43,938        |
| Karnataka                    | 49,73,543        | 49,05,076       | 46,72,645       |
| Kerala                       | 28,23,238        | 27,73,270       | 27,11,527       |
| Lakshadweep                  | 1,516            | 0               | 0               |
| Madhya Pradesh               | 57,53,671        | 55,13,954       | 49,57,931       |
| Maharashtra                  | 90,73,782        | 84,57,153       | 68,21,942       |
| Manipur                      | 2,05,549         | 1,73,789        | 96,815          |
| Meghalaya                    | 72,690           | 70,236          | 64,747          |
| Mizoram                      | 69,420           | 67,534          | 65,510          |
| Nagaland                     | 1,70,286         | 1,68,749        | 1,61,731        |
| Odisha                       | 36,54,583        | 36,28,657       | 29,30,610       |
| Puducherry                   | 9,778            | 9,503           | 9,170           |
| Punjab                       | 22,39,849        | 22,40,071       | 22,14,919       |
| Rajasthan                    | 59,54,395        | 52,04,516       | 48,20,425       |
| Sikkim                       | 8,849            | 11              | 11              |
| Tamil Nadu                   | 36,16,504        | 35,28,387       | 33,72,052       |
| Telangana                    | 35,02,566        | 34,81,591       | 34,14,194       |
| Tripura                      | 1,96,462         | 1,94,696        | 1,89,720        |
| Uttar Pradesh                | 2,02,34,707      | 1,87,35,405     | 1,71,04,668     |
| Uttarakhand                  | 7,14,783         | 7,01,781        | 6,70,035        |
| West Bengal                  | 0                | 0               | 0               |
| Total                        | 8,88,06,301      | 8,45,34,649     | 7,59,27,022     |

Sources: Website of PM-KISAN scheme as accessed on February 12, 2020; PRS. 
2020