Has the Agriculture Budget Really Shot Up by 465% in the Last 10 Years?
While there has been an overall increase in the agri budget, its share in the Union budget's total expenditure has been declining since 2019-20
The Bharatiya Janata Party (BJP) on August 14, 2022 claimed that the Agricultural Budget increased nearly five-fold between 2013-14 and 2022-23. "Modi Government is committed to doubling the income of farmers. Agriculture Budget 2013-14– 21,933.50 crore rupees, 2022-23– 1,24,000 crore rupees", the tweet read in Hindi.
This information was also given in a Lok Sabha response in July 2022 by Narendra Singh Tomar, Minister of Agriculture and Farmers' Welfare (MoA&FW).
Although there is an increase in the amount allocated to agriculture in absolute terms, allocation to the MoA&FW as a percentage of the Centre's total expenditure has reduced in the past few years, showed FactChecker's analysis of previous years' Union Budgets.
Shifting priority areas of the government within the ministry– such as extensive focus on cash support to farmers, and the amount of actual expenditure falling short against the budgeted allocation are other factors that should be considered, experts told FactChecker.
Decline in Share of Agricultural Expenditure
For the budget 2022-23, the Centre allocated 1.33 lakh crore rupees to the MoA&FW. The total allocation amounts to a 3.4% share of the total Union budgeted expenditure for the year, down from 3.8% in 2021-22. Here's a year-wise breakdown of the agriculture ministry's share in the total budget.
This illustrates that from 2019-20 to the current budget, the share of allocation to MoA&FW has declined, after showing an uptick post 2015-16. The total Budget Estimate (BE) this year has increased from last year's BE by 0.7%.
India's public expenditure on agriculture (Union and States combined) has declined faster than the decline in the relative importance of agriculture in the economy between 2010-11 and 2019-20, found the Public Spending on Agriculture In India Report (2011-20) by the Foundation for Agrarian Studies (FAS).
India's total agri expenses as a fraction of total expense fell to 9.5 per in 2019-20 from 11 per cent in 2010-11. There was also a decrease in the share of Agriculture in India's total Gross Value Added (GVA) from 18.2% to 17.8%.
GVA is a figure calculated annually by adding the value of output from all the sectors including agriculture, manufacturing, trade, transport, public administration, etc. It is similar to Gross Domestic Product (GDP) which is obtained by further adding net taxes and subsidies.
The report also found that there was a sharp fall in the Union Government's agriculture expenditure as a percentage of the Agricultural GVA, from 10% to 7%. Therefore, even the overall increase in the ministry's budget has "not been commensurate with the output generated in the sector".
Shift in Focus Areas of Expenditure
According to the FAS report, the focus of the Union government's expenditure in the agricultural sector is "gradually shifting away from expenditure for real production and towards income support, interest subsidy and credit support for farmers".
Agriculture Expenditure Ratio (AER) of crop husbandry has dropped from 4.2% to 2.8% in a decade. This includes funding for schemes on crop management, soil health, seeds, and urea subsidies. Even expenditure on food storage fell – from 5% to 3.6% during the same period.
Expenditure on agricultural research and sustainable agriculture has also come down marginally. The Centre's expenditure ratio on irrigation activities, though, saw a slight increase.
A major chunk of the MoA&FW budget has been designated to the PM-KISAN Yojana since 2019-20, found an analysis of the Union Budgets by PRS Legislative Research. More than half (55%) of the budget allocation this year was towards PM-KISAN.
The scheme was launched in 2019 with the aim of providing income support of Rs 6,000 per year to farmer families– disbursed in three instalments of Rs 2,000. This was to enable them to take care of expenses related to agriculture and allied activities, as well as domestic needs.
Dr Deepak Johnson, Associate Fellow at the FAS told FactChecker that direct income support through schemes such as PM-KISAN is not viable as a long term measure, and focus should be on public investment in improving farm technology and productivity. "It is required to tide over the acute crisis in the rural economy as of now, but this is not a permanent solution for increasing farm productivity. If we continue to focus on only direct income support, the improvement in farm incomes will be lagging," he added.
Actual Expenditure Falls Short of Allocation
The MoA&FW currently has two Departments– Agriculture, Cooperation and Farmers' Welfare and Agricultural Research and Education. The former implements policies and programmes related to crop husbandry alongside managing agriculture inputs, while the latter coordinates and promotes agricultural research and education.
Actual expenditure of both the Departments in the Ministry has been lower than their budget allocations in almost all years during the period 2012 to 2022, noted an analysis of the Union Budgets by PRS Legislative Research.
The Department of Agriculture, Cooperation and Farmers' Welfare spent 28% less than its budget allocation in 2019-20, the most it has underspent with respect to the allocated budget in the last decade. The corresponding value for Dept of Agricultural Research and Education has been 21% in 2014-15.
The Standing Committee on Agriculture (2020-21) noted that large amounts of funds surrendered adversely affect the implementation of the schemes under the department. It further suggested that the flow of expenditure should be resolved with state governments.
Status Check: Has Farmers' Income Doubled?
The claim also mentioned that the Modi-led government is committed to doubling the income of farmers.
This seems to be referring to PM Modi's address speech at a farmer's rally in 2016, where he had underlined the target of doubling farmers' income by the year 2022, when India completes 75 years of Independence. The Central Government had constituted an Inter-ministerial Committee in April 2016 to examine issues relating to "Doubling of Farmers Income" (DFI) and recommend strategies to achieve the same.
There is mixed information on the extent of achievement of this target. As per the most recent NSSO Situation Assessment of Agricultural Households Survey (2018-19), the average monthly income per agricultural household, from all sources, was estimated at Rs 10,218. It was Rs 6,426 in the 2012-13 survey. So, the farm income had risen by 59% till 2019, still 41% short of being doubled.
This comparison also does not account for inflation or increase in input costs. The cost of cultivation has increased by 35% in six years, from Rs 2,192 a month in 2012-13 to Rs 2,959 in 2018-19, as per NSSO.
Additionally, the share of an agricultural household's income from cultivation has reduced from 48% to 37%. Wages (40%) have replaced crop production as the major source of income for such households.
On the other hand, a more recent report by the State Bank of India's Economic Research Department (ERD) observed that for certain crops in some States– such as soybean in Maharashtra and cotton in Karnataka, farmers' income doubled in FY 2022 compared to FY 2018.
"Over the years, we have seen that (input) costs have been rising at a higher rate than the increase in gross value of output. The productivity has almost stagnated. Price support has not kept pace with the increase in costs," said Dr Johnson. "This is a problem that needs to be addressed," he concluded.
FactChecker tried contacting the BJP Headquarters and the Agriculture Ministry via email for clarification and comment but did not receive a response by the time of publishing this article. If and when we do receive a response, it will be updated here.