Agricultural Input Subsidies in India: Quantum of Subsidies to SC Farmers in Uttar Pradesh

Transcription

1 Study No. 119 Publication No.166 Agricultural Input Subsidies in India: Quantum of Subsidies to SC Farmers in Uttar Pradesh K.N. Thapliyal R.A.G. Mahuley R.S. Maurya 2002 Agro- Economic Research Centre University of Allahabad Allahabad

2 PREFACE This study is undertaken by this Centre on the initiation of Directorate of Economics and Statistics, Ministry of Agriculture and Cooperation, Government of India. This is a common study, undertaken by all the AERCs. The Scheduled Castes and Scheduled Tribes are resource poor sections of our society and often their problems are overlooked. They have for historical reasons, remained socially and economically backward for a long period. Due to age-old inhospitable social system these people remain neglected, victimized and exploited with the result that they still remain socially, educationally and economically backward. In the context of ongoing economic reforms and the position of fiscal deficit of the Government, focus on better targeting of agricultural input subsidies is an urgent need of the time. But non-availability of data regarding the pattern of agricultural subsidies used by different socio-economic groups at micro level is the main constraint. This study attempts to analyze the utilization pattern of input subsidies by different socio-economic groups, share of SC farmers in total amount of subsidies used and the effect of differences in the levels of input subsidies used by farmers on cropping pattern, use of inputs and cost and returns. The study is based on macro and micro level data. The micro level data are collected from 200 sampled farmers spread over eight districts in various Agro-Climatic Zones of Uttar Pradesh. The macro-level data are collected from various publications of State Government. The findings of the study reveal that on an average a farmer has utilized subsidies for Rs which varies from Rs in marginal category of farmers to Rs. 11,117 in the size group of large farmers. The share of SC farmers in total subsidies is only per cent, the remaining per cent is used by non SC farmers. The per hectare value of subsidy used by SC farmers is Rs whereas it is Rs in case of NSC farmers. The per hectare value of total subsidies for all farmers is Rs only. The cropping intensity of SC farmers is 128 per cent only, as compared to 138 per cent of non-sc farmers. The per hectare yield of SC farmers for

3 Paddy is nearly 14 per cent and wheat is about 12 per cent less than the corresponding yield rate of non-sc farmers. The per household value of farm assets possessed by SC farmers is Rs against Rs possessed by non-sc household. In view of the scarce availability of data relating to the utilization pattern of subsidies by various socio-economic groups in various Agro- Climatic Zones of Uttar Pradesh, the present report would be of immense utility for the policy makers, researchers and professionals dealing in agricultural inputs. I appreciate very much the cooperation of officials of Agriculture Department at selected districts and State level and the AERC, University of Delhi, which is coordinating this common study. The study is carried out and its report is drafted by Sri K.N. Thapliyal. Sri. R. A. G. Mahuley and Sri. R. S. Maurya assisted in collection, tabulation and analysis of data. Comments and suggestions for improvement of the report are most welcome and will be thankfully acknowledged. Agro-Economic Research Cenre University of Allahabad (Prof. S. A. Ansari) Hon. Director September, 2002

4 CREDIT 1. Over All Guidance Prof. S. A. Ansari 2. Supervision Dr. J. N. Mishra 3. Drafting of Report K. N. Thapliyal 4. Field Survey, Data Sri. R.A.G. Mahuley Processing and Analysis & R. S. Maurya 5. Secretarial Service Mr. M. S. Ansari & Smt. Maya Rani 6. Typing Smt. Nirupama Nigam 7. Xeroxing Sri. H.C. Upadhya 8. Other Services Sri. Raju Kumar & Sri.Amrit Lal

5 CONTENTS Page No. Preface Credit Contains Map I III IV V CHAPTER 1. Introduction 2. Agricultural Subsidies in the State 3. Agro-Economic Profile of the Selected Districts & Sample Farmers 4. Utilization of Agricultural Subsidies- An Evidence from Field Survey 5. Effects of Input Subsidies on Agriculture 6. Summary & Conclusions Appendix Tables Annexure A Annexure B

6 Introduction CHAPTER-I Importance of Agriculture in India Agriculture is the backbone of our economy. Nearly 66 per cent of the people in India are still dependent on it. In India agriculture is not agribusiness, it is a livelihood, a way of life. A research conducted by FICCI shows that 3% growth in agriculture would translate into 2.6% growth for the manufacturing sector and 1.7% for the overall GDP. Thus policies related to agriculture have direct bearing on our National economy and standard of living of a majority of our population. Meaning and Definition of Subsidies Subsidies are defined as payments for the supply of goods or services at less than the cost of production. Subsidy is necessary as a production accelerating catalyst for those new inventions, which are socially desirable but whose adoption needs huge capital and producers believe it to be risky investment 1. Subsidies are negative taxes, they are instruments to transfer resources in favour of those who receive them. 2 Subsidies are also for manipulating or balancing the growth rates of production and trade in various sectors and regions, and for equitable distribution of income for protecting the weaker sections of the society 3. The subsidies may be direct or indirect, cash or kind, general or particular, budgetary or non-budgetary, etc. But their impact is practically visible on both the production and distribution. The economic rationale of subsidies lies in giving incentives to the producers to invest in productive activities and increase production leading to high growth in national income and obtaining desirable structure of production. The social justification of subsidies lies in reducing inter-personal income inequalities and interregional development imbalances Randolth Barker & Yujiro Haymi Price Support V/S Input Subsidy for Food Self-sufficiency in Developing Countries. 2. Shak, C. H. Taxation & Subsidies on Agriculture: A Search for Policy Options Indian journal of Agriculture Economics Vol. 4.

7 Subsidies in Indian Agriculture In India majority of farmers are marginal (59.4%) and small (18.8%) owning and operating less than 2 hectares of land. They are poor. The average size of all operational holdings in India is only 1.5 hectares. In agriculture adoption of modern technology requires huge investment for purchase of High Yielding/ Hybrid Seeds, chemical fertilizers, plant protection materials, improved agricultural tools and implements. It is not possible for small and marginal farmers to adopt modern technology in agriculture without assistance. Subsidies directly related to agricultural sector have been offered in India since independence. The successive Five-Year Plans have almost institutionalized subsidies, extended the scope and increased their quantum. The total quantum of subsidies in India rose from Rs crores in to Rs crores in the fiscal year Out of this amount, agricultural subsidies constitute the major portion. During the past two-decade, the subsidies to agriculture sector provided by Government have recorded phenomenal rise. Comparison with Selected Countries The agricultural subsidies provided by U.S.A, Japan, Canada and India are given in table 1.1. It shows that per farm and per hectare agricultural subsidies are the lowest in India as compared to that Japan, U.S.A and Canada. But if we see the percentage share of agricultural subsidies in Gross Domestic Product (GDP) of these countries in Table 1.2, we find that India is second to Japan followed by U.S.A. and Canada. We also find that the percentage share of agricultural subsidies in GDP is decreasing over the years in India. During 1997, it was 1.90%, which came down to 1.80% in the year 1998 and further came down to 1.70% in the year While in other countries the percentage share of agricultural subsidies in GDP has shown increasing trend-during this period. 3. Sirohi. A. S. Impact of Agricultural Subsidies & Procurement Prices on Production & Income Distribution in India Indian Journal of Agricultural Economics. Vol. 39 (4). 4. Bajpai, A. D. N. & Srivastava S. K. Relevance of Subsidies in Determining Fertilizer Consumption in Indian Agricultural An Economic Analysis Journal of Rural Development Vol. (4).

8 5. Table 1.1 Per farm and Per Hectare Agricultural Subsidies Base year Country Per Farm Per Hectare Per Farm Per Hectare Per Farm Per Hectare Per Farm Per Hectare Canada Japan U.S.A India Source: For Developed Countries Agricultural Policies in OECD Countries for India- Central Statistical Organization, New Delhi. Table 1.2 Percentage Share of Agricultural Subsidies in G.D.P. Base year Country Total Subsidies % of GDP Total Subsidies % of GDP Total Subsidies % of Total Subsidies % of GDP GDP Canada Japan U.S.A India Source: For Developed Countries Agricultural Policies in OECD countries for India Central Statistical Organization, New Delhi. Though the International Monetary Fund (IMF) and World Bank pressurize India to reduce the agricultural subsidies, under GATT agreement with WTO, there is no compulsion for our Government to remove or reduce any input subsidies. As the Aggregate Measure of Support (AMS) does not exceed 10 per cent of the total value of the agricultural production in a developing country, the country is not required to reduce either its product specific or non-product specific support under GATT negotiation.

9 Review of Literature The Government has been providing agricultural input subsidies through fertilizers, irrigation, electricity, seeds, agricultural machines, diesel and credit. Over a period of time, the input subsidy amount has grown to be very large and appear as a huge burden on the Government budgets. They also exceed the Government Capital investment in the agriculture sector. These observations have led too much questioning of the subsidy regime in agricultural inputs. Acharya, S. S (1998) observed that for achieving the twin objectives of assuring remunerative prices to the farmers and making available food grains to the consumers at affordable prices, the instrument of food and input subsidies must be retained as an essential component of development policy. Agriculture, primary education, primary healthcare and social security should have received priority in resource allocation for broad based development, while they are perhaps receiving even less allocations after the new economic policies were launched in the country in 1991, while the subsidies now being given to farmers and for food are being questioned, the outgo on non-merit subsidies and revenues foregone in the form of concessions, duty exemptions and leakages are around six times more. Indian Agriculture: Policy Issues and Priorities, Agricultural situation in India, August, In National Bank News Review (Oct, Dec, 2000, Vol.16-no-4) Nanda, Y.C- Challenges for Indian Agriculture-on role of subsidies, observes one critical aspect of the investigation into the declining profitability related to the inputs pricing policy, including the issue of subsidies. Several studies conclude that the subsidies do not reach the farmers directly but in fact benefit more the manufacturers or providers of these inputs. The National Agricultural Policy has signaled that the subsidies on inputs may be rationalized. Ipso facto, farming operations are likely to become more expensive and accentuate the trends in declining profitability. Therefore, reduction in subsidies may have to be offset with an appropriate pricing policy for the output and an effective safety net. The farming community may not mind higher input prices if the market price for their produce is commensurately increased. Dr. R. S. PARODA in his article Input subsidies in Agriculture: Needed Reforms- Agricultural situation in India-Oct, 2000, observed. Farm subsidies are reported to be crowding out the public investment and

10 are not sustainable beyond a limit and time period. The other serious problems due to continued subsidies are reported degradation of land and water resources and their impact on the sustainability of agricultural growth. For instance, power subsidy to private tube-wells have led to overexploitation of surface and ground water. Similarly, owing to fertilizer subsidy the quantity of various fertilizers used per hectare have been higher among some sections of the farmers and in few parts of the country. The proportion of different fertilizer use has also been different than recommended. Though, subsidies as incentives are effective in pushing in agricultural growth to a certain extent, but it is important to make sure that they do not become a permanent feature of the Indian economy. There is growing criticism against the continuance of agricultural input subsidies particularly on fertilizer, irrigation, power and credit for some reasons. First, these subsidies are fiscally not sustainable. Second, they also encourage misuse of resources leading to land degradation, water logging, depletion of ground water resources, soil salinity, etc. Third, they crowd out public investment resources adversely affecting overall agricultural growth. Further, most of the subsidies given as incentives and support in the name of the poor, rarely reach the poor and small farmers and are usually cornered by the rich farmers. The time has, therefore, come to take a fresh look at the issue of input subsidies. An analysis of reasons for increase in subsidies shows that both expansion of input use and rise in the rate of subsidy have contributed to the increase in total amount of subsidies. While in case of fertilizers, the increase in rate of subsidies contributed to bulk of the incremental subsidy burden, in electricity it is the increase in the use of electricity. In case of implicit subsidy on canal irrigation, both the expansion in irrigation and increase in rate of subsidy contributed to an increase in subsidy burden. In real terms, the increase in per unit subsidies has been the maximum for canal irrigation followed by electricity and fertilizer. To sum up, during the initial stages of adoption of new technology in agriculture, some of these subsidies were justified as front-up costs. However, over time it was found that the rich States and irrigated areas, certain crops and sometimes well-to-do farmers, captured a disproportionately high share of the major input subsidy programmes. Parts of on-going reforms involve reducing/removal of these subsidies with a view to lessen fiscal imbalance and also to remove the distortion in farm input prices to promote efficient use of inputs

11 Need of the Study The studies on agricultural input subsidies conducted so far do not give an idea about the overall impact of important agricultural subsidies on different categories of farmers. The SC/ST farmers are by and large ignored and their problems are overlooked. This is also important from the point of view of resource inadequacy of the small, marginal and SC/ST farmers. This underlines the urgency of ensuring subsidies for the intended groups and making adequate cost recoveries from those with higher purchasing power. Against this backdrop of growing budgetary allocation of providing subsidies to agriculture, an analysis of their implications for different classes of farmers is of crucial importance in order to assess the extent to which they are consistent with the attainment of set objective of attaining equity and stimulating growth. For this, there is need to know the quantum of subsidies used and the differential effect of subsidies across differential groups of households at micro level. The adverse effect of such policy, if any, on the small, marginal, SC/ ST groups could then be corrected by designing proper compensatory programmes. The non-availability of data pertaining to the pattern of agricultural subsidies used by different socio-economic groups at micro-level constrains the policy makers to have a clear understanding to the effect of these policies. With a view to ascertaining the ground reality in the context of agricultural subsidies and its effects on Scheduled Caste farmers, the present common study has been under taken in the State of Uttar Pradesh by AERC, Allahabad on the initiation of Ministry of Agriculture, Government of India. Objectives The broad objectives of the study are: I. To examine the utilization pattern of subsidies by different categories of farmers. II. III. To assess the share of SC farmers in total amount of subsidies used. To analyze the overall effect of differences in the levels of input subsidy used by various categories of farmers on crop pattern, cropping intensity, adoption of improved technology, input use, crop productivity and returns.

12 Methodology The sample is spread over eight agro-climatic zones of Uttar Pradesh. One district from each zone is selected on the basis of proportion of irrigated area to gross cropped area and the high percentage of SC/ST farmers to total cultivators. Thus, the selected districts are, Ghaziabad from Western Plain Zone, Shahjahanpur from Mid-Western Plain Zone, Mathura from South- Western Semi-Arid Zone, Sitapur district from Central Plain Zone, Gorakhpur from North Eastern Zone, Azamgarh district from Eastern Plain- Zone, Chitrakoot from Bundelkhand Zone and Sonbhadra district from Vindhyan Zone. Bhabar & Tarai Zone which is spread partly over five districts in the North has been excluded as it does not fully cover any single district of the State. The proportion of irrigated area to the gross cropped area, percentage of SC/ST population to total population and the proportion of SC/ST cultivators to total cultivators in the selected districts is presented in Table 1.3. It shows that two selected districts are dry as the proportion of irrigated area is less than 30 per cent of the gross cropped area in Chitrakoot from Bundelkhand Zone and Sonbhadra from Vindhyan Zone. The remaining six districts are irrigated and the proportion of irrigated area to GCA vary from nearly 53 per cent in Gorakhpur and Sitapur to above 99 per cent in Ghaziabad. The proportion of SC cultivators to total cultivators in the selected districts range from the minimum of per cent in Ghaziabad to the maximum of per cent in Sonbhadra district. The Scheduled Tribe cultivators form negligible proportion to total cultivators in the selected districts, hence they are excluded. Table 1-3 Proportion of Irrigated Area and SC/ST Cultivators in Selected Districts Selected District Percentage of Irrigated Area to GCA Percentage of SC/ST Population Percentage of SC/ST Cultivators to total Cultivators S.C. S.T. Total SC/ST Ghaziabad Shahjahanpur Mathura Sitapur Gorakhpur Azamgarh Chitrakoot Sonbhadra

13 The villages for field survey are chosen in consultation with the Deputy Director, Agriculture Extension and the District Agriculture Office on the basis of availability of different categories of SC and other farmers and coverage of input subsidy programmes from two most representative clusters of the District. In all 48 villages are covered. The list of beneficiaries who availed direct subsidies is collected from the office of Deputy Director, Agriculture Extension. From the list, the SC and other farmers in the selected villages are stratified into four size groups of operational holdings i.e. Marginal (below 1 ha.), Small (1-2 ha.), Medium (2-4 ha) and Large (above 4 ha.) and selected randomly. The number of SC and non-sc farmers in each category is based on their proportion to total SC and other cultivators in the State. The proportion of SC and other farmers in different size-groups as per the Agriculture census of the State is presented in Table 1.4. Table-1-4 Size Group Wise Distribution of Holdings Size-Groups Scheduled Caste Other Caste Average Size of Holding (ha) No. % Area % No. % Area % S.C Others Marginal (below 1.0 hect.) Small ( hect) Semi-Medium ( hect) Medium ( hect.) Large 10.0 & above Total Source: Agricultural Census of U.P Board of Revenue Uttar Pradesh In Agriculture census, there are five size-groups in the State. For this study we have taken medium (4 ha to 10 ha) and Large size groups in one group i.e above 4 ha. as large size. Thus from the category of Marginal farmers, 84 SC and 74 non-sc farmers are selected. While from the small size-group, the number of SC and non-sc farmer is 11 and 15 respectively.

14 From the category of Medium farmers, 4 SC and 8 other farmers and from large farmers one SC and 3 non-sc farmers are selected. Thus in all, 200 farm households (25 from each selected district) farm the base of this study. The Data This study is based on micro and macro-level data. It covers both direct and indirect subsidies granted to agriculture by the Government. The data are collected through personal interview method in a structured schedule designed by the Coordinating Centre (AERC, Delhi). The Field level information is collected from the sample farmers, village, block and District level Extension officials, input supply agencies and public representatives at Block level. The Macro level data are collected from various departments of the State Government. The Field Investigation in selected districts is conducted between July- December Reference Year The study covers the period

15 CHAPTER-II The Scenario of Agricultural Input Subsidies in U.P. In this chapter an attempt is made to study the input subsidies admissible to farmers. Before we deal the scenario of agricultural input subsidies, it will be worthwhile to study the main features of the State. Profile of Uttar Pradesh With a population of more than 150 million and an annual per capita income of about Rs. 9323, Uttar Pradesh is the most populous State in India. The State has 70 districts, 17 revenue divisions, 299 Tehsils, 812 blocks and 1.09 lakh villages. The State is spread in Sq. K.m and the density of population is 689 per Sq. Km. The highest percentage of Scheduled Caste population in India is enumerated in Uttar Pradesh (21.24 per cent). The list of Scheduled Castes in the States is appended in (Table 2-1). The State is endowed with abundant natural resources and varied agro-climatic zones. Agriculture is the mainstay of the State s economy. Four out of five people in Uttar Pradesh live in rural areas and about three-quarters of the State s population depend on agriculture for their livelihood. Uttar Pradesh is one of the most backward States in India, with only Human Development Index; it could achieve only 59 per cent of the level of growth of the country as a whole since independence. U.P. ranks 13 th in net State Domestic Product (SDP) in comparison to other States in the post reform period. Nearly forty per cent of U.P. s population is below poverty line and the State ranks 9 th in Infrastructure Development Index in the country. Despite occupying a central place in the country s politics, U.P. s economic scene is in dismal shape due to rampant corruption, population explosion, failure of Government machinery to percolate benefits to the grass-roots and the political mis-governance besides heterogeneous agroclimatic situation, large tract of problem soil, uneven distribution of rainfall and very low size of holding. Average size of holding in the State is only 0.90 hectare and nearly 74 per cent of the total holdings are less than one hectare. The State is the largest producer of food-grains, potato, sugarcane etc in the country.

16 Subsidies Admissible to Farmers The following kinds of subsidies are admissible to the farmers under different programme of State Agriculture Department. Integrated Cereals Development Programme This scheme envisages boosting cereals production in Uttar Pradesh. The crops included under this programme are Paddy, Wheat, Barley, Jowar, Bajra, Ragi and Maize. The programme covers all the 70 districts and 809 blocks of this State. This programme comprises of distribution of certified seeds, at subsidized rates, organization of demonstrations on new production techniques, Hi-yielding & Hybrid seed demonstration and integrated pest management demonstration, farmers training (two days) for agricultural labourers & farm women, distribution of agriculture implements-hand operated, bullock drawn and power drawn implements-besides power tiller and sprinklers set of the diameter of 75 M.M & 90 M.M. The details of subsidies are given in Table 2.1. Hybrid Maize Development Programme This programme is under technology mission. It aims to increase per hectare productivity of maize in the State. This is a centrally sponsored scheme. During the year for hybrid maize development programme 38 districts in Kharif season and 9 districts in Rabi season are selected. District Gonda. Balrampur, Behraich, Shrawasti and Ballia are selected for both Rabi and Kharif maize. The components under this programme are distribution of hybrid and certified seeds, improved technique demonstration, integrated pest management demonstration, farmers training, distribution of agricultural implements distribution of seed minikits free of cost and extension of technology through electronic media etc. The rate of subsidies admissible to farmers is presented in Table An increase in production by and that in productivity by % are recorded under this programme. (Table 2.2)

17 Table: II.1 Agricultural Input Subsidies under Cereals Development Programme Sl.no Items Rate of Subsidies 1 Production Technique Demonstration 1 Rs per Hectare (Rs kharif, Rs Rabi) 2 Hy. Seed Demonstration 2 Rs per Hectare per Demonstration 3 I. P. M. Demonstration (in 40 ha) 3 Rs per Demonstration 4 Farmer s Training 4 Rs. % per Trainee per Day 5 Seed Replacement (b) Hybrid Seed 5 Rs. 200 per Quintal ( b) Rs. 500 Per Quintal 6 Implements (Hand/ Bullock Drawn) 6 50 % of the Cost of Implement to the Maximum Limit of Rs Power Tiller, Paddy Planter & Reaper 7 50% of the cost Maximum Rs Sprinklers Set 8 33% of the cost for General Farmers Maximum (4650) 50% of the cost for SC/ST farmers Marginal & Small Farmers Maximum (Rs. 7000) 9 Harrow, Paddy Pudler Multi crop Thresher 9 30% of the cost to the Maximum Limit of Rs Per farmers 10 Seed-Cum-Fertilizer Drill 10 30% of the Cost Maximum Limit Rs. 5000

18 Table: II-2 Hybrid Maize Development Programme Sl.no Item Rate of subsidy 1 Improved Technology Rs per Hectare for one crop demonstration 2 Integrated Pest Management Rs. 150 per Hectare Demonstration 3 Minikit of Seed Demonstration Hybrid Maize Rs. 60 for 2 Kg Minikit 4 Agricultural Implements: Improved varieties Rs. 50 for 2 Kg. Minikit (a). Hand and Bullock Drawn 50% of the cost, Maximum limit Rs. 1500/ implement (b). Power Driven 5. Training of Farmers & Farm Women for 2 days 25% of the cost, Maximum to Rs. 5000/ implement Rs. 50% per farmer per day. National Pulse Development Programme This is centrally sponsored scheme, with 25 per cent share of the State government. It covered 44 districts and all major pulse crops like Urd, Moong, Arhar, Gram, Lintil, Rajma and Pea. The selected districts of the State under this programme are Aligarh, Hathras, Agra, Firozabad, Etah, Badaun, Shahjahanpur, Etawah, Auraiya, Kanpur Dehat, Jhansi, Jalaun, Lalitpur, Hamirpur, Mahoba, Banda, Chitrakoot, Fatehpur, Allahabad. Kaushambi, Pratapgarh, Varanasi, Chandauli, Ghazipur, Mirzapur, Sonbhadra, Sant Kabir Das Nagar,. Gonda, Balrampur, Behraich, Shrawasti, Rae Bareili, Sitapur, Hardoi, Ambedkar Nagar, Sultanpur and Barabanki. The main components under this programme are distribution of certified seed and seed Minikits free of cost, block Demonstrations, IPM demonstration, distribution of P.S.B. and Rizobeam culture, purchase and use of breeder seed and foundation seed at State government farms, distribution of improved agricultural implements, plant protection chemicals and equipments, seed treatment, micro nutrients, Gypsum/ Pyrite, distribution of sprinkler sets and training of farmers. The rates of subsidies admissible under the programme are presented in Table 2.3.

19 Table: II.3 National Pulse Development Programme Sl.no Items Rate of Admissible subsidy 1 Distribution of Certified Seed (for 1 30% of the Cost, maximum Rs, 800/qtl gram, pea, lentil) 2 Seed Minikits 2 Free of cost 3 Demonstration, Urd, Moong, Arhar Gram Masoor Rajma 3 Rs. 1500/ per hectare Rs. 2000/per hectare Rs. 1700/ per hectare Rs. 3000/-per hectare 4 Integrated Pest Management 4 Rs. 750/ per hectare 5 Rhizobium Culture P.S.B. Distribution 5 50% of the cost Rs. 50/ per hectare 6 Distribution Of Improved Implements Hand / Bullock Drawn Power Driven 6 50% of the cost to the maximum limit of Rs % of the cost maximum limit Rs 10,000 per farmer 7 Equipment Plant Protection Spray Machine: Hand Operated Power Driven 7 50% of the Price to the Maximum limit of Rs. 800/- 50% of the Price, Maximum limit Rs. 2000/- per farmer 8 Seed Treatment 8 50% of the Price maximum limit Rs Micro Nutrients 9 50% of the cost to the Maximum limit of Rs. 200/ ha. 10 Chemical Pesticides 10 50% of the cost, Maximum Rs. 500/ha. 11 N. P. B. Use 11 50% of the price or Rs. 250/ha. 12 Gypsum/Pyrite 12 %0% of the cost, maximum Rs. 500 per hectare 13 Distribution Of Sprinkler Sets 13 33% of the price for general farmers 50% of the price for SC/ST farmers, marginal farmers & small farmers. Farmers Training 14 Rs. 50 per farmer per day

20 Oilseeds Production Programme The aim of this programme is to maximize the production of oilseed. All the oilseeds producing districts are included in this programme. Cropwise coverage of the districts are: Groundnut in 19 districts, Soyabean in 17 districts, Til (sesamum) in 17districts, toraia in 30 districts, Rai/Mustard 47 districts, Linseed 12 districts and sunflower in 37 districts of the State. The main components of the programme are production of foundation and certified seed, distribution of seed Minikits, distribution of certified seeds at subsidized rates, IPM demonstration, distribution of culture and P.S.B., distribution of improved agricultural implements and plant protection chemicals and equipments, seed treatment, farmers training, weedicides, micro-nutrient distribution, Gypsum/Pyrite distribution and distribution of sprinkler set. Details of subsidy admissible for oil seeds production programme are given in Table 2.4. National Oilseed and Vegetable Oil Development (NOVOD) Board This is a centrally sponsored scheme for popularising and maximizing the production of oilseeds. It covers 4 oilseed crops only, i.e. Soyabean, Groundnut castor (Hybrid) and Niger. Crop-wise number of selected districts are like this : Soyabean 50 districts, Groundnut 17 districts, castor 16 districts and Niger 10 districts. Thus this programme covers almost all the districts of the State according to agro- climatic suitability of different oilseed crops. The main components under this programme are block demonstrations, distribution of seed Minikits, training and visits of farmers, distribution of agricultural implements and production of certified seeds. The details of the admissible subsidy to farmers are presented in Table 2-5. Intensive Cotton Development Programme The objective of this programme is to maximize the production of quality long staple cotton. It is a centrally sponsored scheme. This programme is in operation in 22 districts. These districts are: Agra, Mathura, Aligarh, Etah, Etawah, Firozabad, Kanpur (Dehat), Jhansi, Jalaun, Hamirpur, Banda, Lalitpur, Allahabad, Fatehpur, Hardoi, Meerut, Bulandshahar, Ghaziabad, Bagpat, Saharanpur, Muzaffarnagar and Bijnaur.

21 Table: II-4 Oil Seeds Production Programme Sl.no Items Admissible Rate of Subsidies 1 Distribution of seed Minikits Free of cost 2 Distribution of certified seed (ground nut, soybean) 30% of the price to the maximum limit of Rs. 8000/per quintal 3 Block Demonstrations (G. Nut, Til, Toriya, Rai, Mustard, Alsi 50% of the total investment to the maximum limit of Rs. 2000/ha. & sun flower) 4 I.P.M. Demonstration Rs. 750/- per hectare 5 Rhizobium culture/distribution of P.S.B 50% of the cost to maximum of Rs. 50% per hectare 6 Seed Treatment 50% of the cost of the chemical, maximum Rs.100/-per hectare 7 Weedicides / Pesticides 50% of the cost of suitable: chemical, maximum limit Rs. 500/per ha. 8 Micro Nutrients 50% of the cost of maximum limit of Rs. 2000/per ha. 9 Gypsum / Pyrite distribution 50% of the material & transportation charges 10 Improved Agriculture Implements (a) hand operated (b) Power driven 11 Plant Protection equipments (a) hand operated (b) Power driven 50% of the cost to the maximum limit of Rs.2000/per implement. 50% of the cost to the maximum limit of Rs.10000/per farmer per implement. 50% of the cost to the maximum limit of Rs.800/per equipment. 50% of the cost to the maximum limit of Rs.2000/per equipment. 12 Sprinkler sets For general farmers-33% of the cost For S.C/ST small & marginal (a) 50% of the price 13 Farmers training Rs. 50 per farmer per day

22 Table: II-5 Details of Subsidy under NOVOD Board Sl.no Crop Item of Input Rate of Subsidy 1 Soyabean Block Demonstration 50% of the cost of inputs or a maximum of Rs. 2000/hectare Seed Minikit Rs. 376 Per Minikit of 15 K.G Farmers Training Rs. 250/ per Farmer Multi crop Thresher 50% of the cost or Maximum Rs per item 2 Ground Nut Block Demonstration 50% of the cost of agril. Inputs, Maxi. Rs. 2500/Ha. Seed Minikit Rs. 500 per Minikit of 20 K.G. Decorticator Rs. 10,000 per decorticator Field visits Actual bus/ train II class fare 3 Castor (Hybrid) Farmers Training Block Demonstration Minikit of Seed Field Visits Farmers Training Rs. 200 per farmer 50% of all agril. Inputs, maximum Rs. 1500/Ha Rs. 140 per minikit (20 K.G) Actual Bus/ Train second class fare. Rs. 200 per farmer per day for 2 days 4 Niger Block Demonstration 50% of the input cost, maximum Rs per ha. Seed Minikit Rs. 120 per minikit (40 K.g) Hand Gloves Rs. 50 per Pair Hand gloves Farmers Training Rs. 200 per farmer 5 Production of certified seed Rs. 500/ per quintal to the producer Main components under this programme are production of breeder seed, distribution of certified seed, demonstration of production techniques and Fironman Traips, demonstration and training in integrated pest management, distribution of hand operated plant protection equipments, training of farmers and village level extensive workers and distribution of sprinkler set. Table 2.6 provides the rate of admissible subsidies to the farmers.

23 Table: II-6 Details of Subsidy under Intensive Cotton Development Programme S. no Item Rate of Subsidy 1 Foundation Seed Production Rs per quintal 2 Distribution of certified seed 50% of the sale price, to the maximum limit of Rs per quintal 3 Demonstration Rs per Hectare 4 I.P.M Demonstration Rs. 800 per hectare 5 Distribution of hand operated 50% of the Price of the implements plant protection implements 6 Training of farmers (for Rs. 200 per farmer days) 7 Distribution of sprinkler sets For general farmers: 33% of the price of the set For scheduled caste farmers: 50% of the price of the set Centrally Sponsored Special Jute Development Programme This programme is in operation in 6 districts of the State. These districts are Sitapur, Lakhimpur Kheri, Bahraich, Barabanki, Gonda and Pilibhit. The other stable crop Sanai is also included under this programme which covered 18 districts. These districts are Varansi, Ravi Das Nagar, Sonbhadra, Mirzapur, Jaunpur, Azamgarh. Allahabad, Pratapgarh, Banda, Hamirpur, Mahoba, Jalaun, Kanpur (Dehat), Fatehpur, Ghazipur, Mau, Kushi Nagar and Gonda. The components under this programme include distribution of certified seed, demonstration of production technique, construction of tank, distribution of fungal culture packets, training of farmers and distribution of agricultural implements which include, Multi Harrow Seed Drill, Wheel hoe and foot sprayer. The admissible subsidy is given in Table 2.7.

24 Table: II-7 Details of Subsidy under Centrally Sponsored Special Jute Development Programme Sl.no. Input items Rate of subsidy 1 Distribution of certified seed 25% of the sale price to the maximum limit of Rs. 600 per quintal 2 Distribution implements (a). Multi Harrow Seed Drill (b) Wheat Hoe (c) Foot Sprayer 75% of the sale price to the maximum of rs per seed drill 75% of the sale price to the maximum of Rs % of the sale price to the maximum of Rs Demonstration Rs per Hectare 4 Construction of Ratting Rs per tank 5 Training of farmers (for 2 days) Rs. 200 per farmer 6 Distribution of culture packets Rs. 12 per packet Centrally Sponsored Scheme of Promotion of Agricultural Mechanization This scheme is in operation in all the 70 districts of the State. Under this scheme, subsidy for Rs. 3,00,000/= is given to farmers for purchase of 30 P.T.O. H.P. Tractor. However a limited number of quota for tractors is allotted to each district.

25 National Watershed Development Programme for Rainfed Areas This programme is in operation in 32 district of the State which are: Agra, Saharanpur, Sitapur, Lakhimpurkheri, Bahraich, Barabanki, Gonda, Pilibhit, Etah, Etawah, Firozabad, Kanpur (Dehat), Jhansi, Jalaun, Hamirpur, Banda, Lalitpur, Allahabad, Fatehpur, Hardoi, Meerut, Bulandshahar, Ghaziabad, Bagpat, Saharanpur, Muzaffarnagar, Bijnaur. Mau, Mahoba, Ballia, Jaunpur, Siddarthnagar, Maharajganj, Deoria, Kushi Nagar,Balrampur, Chitrakoot, Shravasti and Sultanpur. The main objective of this programme is to conserve the moisture, proper drainage system, line treatment, development of livestock and appropriate production system of crops, fruits fodder & fuel in the water shed. Under this programme the beneficiaries of all the categories get cent per cent subsidy from the Government. Centrally Sponsored Scheme in Flood Prone Catchment of River Gomti and Sone This project is in operation in 13 districts, which are Lucknow, Khiri, Sitapur, Shahjahanpur, Hardoi, Unnao, Barabanki, Pratapgarh, Sultanpur, Faizabad, Jaunpur, Varanasi and Sonbhadra. The main components under this project are contuse bunding, drainage line treatment, development of pasture land, Tanks and Small dams, Agro-forestry, forestation and orchards besides crop demonstrations and farmers training. The subsidies available for orchard to all the farmers are 100 per cent, for development of agro-forestry and orchard. All the farmers get plants free of cost, for crop demonstration Rs. 500/-, for conservation of moisture and cultivation of green manure Rs. 550 per hectare to all the categories of farmers. Centrally Sponsored USAR Reclamation & Development Scheme The aim of the scheme is to develop the usar land for production use by use of Gypsum and green manuring. For use of Gypsum the rate of subsidy is 50 per cent to the maximum of Rs. 3850/Ha. And for use of green manure it is cent per cent. Maximum limit is Rs. 650/ha. This scheme covers 14 districts which are: Meerut, Saharanpur, Muzaffarnagar, Badaun, Jyotiba Phule Nagar, Bareilly, Farrukhabad, Mau, Ballia, Gorakhpur, Lucknow, Sitapur, Barabanki and Faizabad.

26 Integrated Watershed Development Project in Rainfed and Drought Prone Eco-System of Bundelkhand with NABARD Assistance This project aims at land and water conservation. It covers 57 watersheds, which are spread in Lalitpur, Jhansi, Jalaun, Hamirpur, Mahoba, Banda and Chitrakoot districts of Bundelkhand. The sharing of costs between NABARD and State government is 90% and 10% respectively. Under this programme the marginal and small farmers receive cent per cent subsidy. Ravine Project with E. E. C. Assistance This project covers an area of ha. in district of Firozabad, Kanpur, Dehat, Jalaun, Hamirpur Fatehpur and Banda with cost of Rs crore. All categories of farmers are entitled to get cent per cent subsidy on check Dam, Planting grass and agro-forestry, orchard development in slopy ravines, Rs per ha. for cultivation of pulse crops, free fodder seed distribution and improve breeds of goats, cows & buffaloes. Waste Land Development Scheme For development of wasteland, 12 districts are selected. The SC/ST farmers are entitled to 95 per cent subsidy and other category of farmers for 90 per cent subsidy on the total costs incurred on land improvement and development of moisture conservation work, drainage, line treatment, improved livestock and production system. For development of committee works and common village land, cent per cent cost is sanctioned as subsidy. The districts covered under this programme are: Agra, Firozabad, Etawah, Azamgarh, Jaunpur, Varansi, Fatepur, Kanpur Nagar, Mirzapur, Lakhimpur, Aligarh and Sitapur. Drought Prone Area Development Programme The aim of this programme is to take up and execute the developmental works in drought prone areas. The admissible rate of subsidy for community works and village common land is 100 per cent of the total cost while the subsidy admissible for individuals is 95 per cent of the total cost for SC/ST farmers and 90 per cent for other farmers. The coverage of this scheme is in 8 districts. These districts are. Jhansi, Jalaun, Mahoba, Banda, Chitrakoot, Allahabad, Gonda and Bahraich.

27 Intensive Sugarcane Development Programme Sugar cane is one of the main cash crops grown in U.P. About half sugarcane area and production of the country is from U.P. There are three schemes under this programme (i) (ii) Improved Sugarcane Seed Production and Distribution Scheme-In this scheme SC/ST category seed growers of foundation and primary seed nurseries, get subsidy at the rate of Rs and Rs per hect. While farmers of other categories, get at the rate of Rs and Rs. 500 per hectare respectively. Seed and Soil Treatment Programme-Subsidy is given at the rate of 25% of the cost for insecticides and chemicals used for seed and soil treatment for all categories of farmers. (iii) Ratoon Management Programme- Subsidy at the rate of 25% is admissible to all farmers in order to get better yield from ratoon. Apart from this, the State Government bears 50% cost of the road construction under Inter village Link Scheme to facilitate the transport of sugarcane from field to cane purchasing Centres of the sugar-mills. To control insects and pests ground and aerial operation are done by the State government. Centrally Sponsored Schemes which comprise field demonstrations, Training Programme, Distribution of Agricultural Implements, Seed Multiplication Programme, Heat Treatment Plant etc. are also implemented. The funding is shared by State and Central Govt. on 25:75 basis. Small and Marginal Farmers Programme Free boring scheme under this programme aims to increase agricultural production on the fields of small and marginal farmers. Under this scheme financial assistance is provided to the cultivator upto Rs. 3000/- for small farmers, Rs. 4000/- for marginal farmers and Rs. 5000/- for SC/ST farmers. Subsidy on pump-sets upto Rs. 2800/-, Rs. 3750/- for small and marginal farmers respectively and Rs. 5650/- for SC/ ST farmers is being provided.

28 Table II-8 Scheme-wise Expenditure during in Uttar Pradesh (In Lakh Rs.) AGRICULTURE Approved Outlay Actual Expenditure Cereals Development Programme Hybrid Maize Development Programme National Pulse Development Programme Oil Seeds Production Programme Cotton Development Programme Small Tractors (30 HP) N.A Usar Reclamation Development N.A Revive Project NAWARD Assisted N.A Waste-Land Development Scheme Drought Prove Area Development Programme Intensive Sugarcane Development Programme Small and Marginal Farmers Programme (Free Boring) Macro-Management of Assistance N.A Sugarcane Link Roads Intensive Cane Development Programme HORTICULTURE S.T Ornamental gardening Betal Cultivation Bee-keeping Special Component Plan Fruit Development in the State Development of Vegetable & Spices ANIMAL HUSBANDRY S.T Vety. Services & Animal Health Cattle & Buffaloe Development Poultry Development Sheep & Wool Development Piggry Development Other Livestock Development - - DAIRY S.T Fodder & Feed Development - - Dairy Development Project Operation Flood Projects FISHERIES S.T Fisheries Other Expenditure FORESTRY S.T Forestry Development Social Forestry S.T Grant Total Source: Annual Plan , A Supplement of Volume-II, Statement III, Schemewise Outlays & Expenditure, Govt. of Uttar Pradesh, State Planning Commission.

29 Direct Subsidy Channels The direct input subsidies reach the farmers through following routes: Crop specific direct subsidies such as HYV/Hybrid and improved seeds, culture, micronutrients etc. reaches the farmers through the chain of Seed Stores spread in the State at block levels. The expected demand is assessed by Kisan Mitra, block officials and district agriculture officer in advance and they try to procure it in advance of sowing season. The seed minikits are also supplied through these stores. The limited number of these kits make the task of distribution difficult. The State Agro-Industrial Corporation is the main agency to supply farm tools, implements and equipments to the farmers on subsidy. One 30 HP Tractor in each district to SC farmers is also supplied on subsidy of Rs. 30,000/ by the corporation on the recommendation of the district officials. The subsidies on animal husbandry is channelised through the District Rural Development Agency. The Land improvement specific subsidies are offered by soil conservation department. The volume of direct subsidies in the State is given in Table II-8. Indirect Subsidies Part II In this study we are covering the three key inputs viz, fertilizer, irrigation and power, Fertilizers The fertilizer subsidy to the farmers is estimated as the difference between the fertilizer prices which farmers pay under the administrated price system and the prices which they would have paid to purchase fertilizers in the open market in a free market environment (Hanumantha Rao Committee Report, 1998) The nutrients (N.P.K) of the fertilizers (Urea, DAP, MOP etc) have been worked out by the proportion of the nutrients in different fertilizers.

30 The per Kg. subsidy on each nutrient is calculated. It comes to Rs for N, Rs for P and Rs for K. The subsidy going to the farmers on import parity basis during (Urea Rs per tonne, DAP Rs per tonne and MOP Rs per tonne) forms the base for finding out per Kg subsidy on N. P and K. The consumption of fertilizer in the State as per the Bulletin of Agricultural Statistics, U.P. is N M.T., P M.T. and K M.T. Irrigation The area irrigated by canal and State tube wells in the State is nearly Lakh hectares (Bulletin of Agricultural Statistics, U.P). The data on cost and revenue receipts are not available. We have used the figures of income and expenditure of irrigation department from the State budget documents, (Statistical Diary: 2000 Economics and Statistical Division, State Planning Institute, U.P.) which shows the income of Rs lakhs and expenditure of Rs lakhs. The difference in expenditure and income is for Rs lakhs. If we divide the irrigated area (53.62 lakh ha.) by this amount, we get Rs Thus the per hectare subsidy on irrigation is estimated for Rs only. Power The Government of Uttar Pradesh enacted the State Electricity Improvement Bill 1999 for all round efficiency. The State Electricity Board was restructured into U.P. Power Corporations Ltd. for power generation, distribution and revenue collection. The State Government took steps to write off the loan of Rs. 19,500 crores to the State Electricity Board and took upon itself the burden of paying Rs.3045 crores owed to the Central undertakings. But the power situation did not improve in the State. The daily demand of the State is around 125 million units. However the availability is around 101 million units which comprise 61 million units per day of hydro and thermal generation in the State sector and 40 million units of import from other agencies. The average cost of electricity supplied to the consumer at doorstep comes to be around Rs per unit, whereas the average sale price per unit comes to be around Rs. 2.00, resulting in Rs 1.25 net loss to the U.P. Power Corporation in every unit supplied (Times of India, April 6, 2001).