[Economic Survey] Ch8: Agriculture Fertilizer, Nutrient Based Subsidy Policy, Budget 2014, Schemes, Funds

Economy53 Comments

India Yearbook
  1. Prologue
  2. [Act 1] Fertilizers: Botany /Chemistry angle (NCERT)
  3. [Act 2] Subsidies: Where is it counted in budget?
  4. [Act 3] What is Nutrient Based subsidy (NBS)?
    1. Disadvantages of NBS?
    2. Urea smuggling
  5. [Act 4] Budget-2014 on Agriculture
    1. Soil Health card
    2. National market & Food security
    3. AGRO Finance
    4. AGRO Funds
    5. AGRO R&D support
  6. Appendix:
    1. Indigenous cattle breed
    2. Existing Agriculture extension services
    3. National Food Security Mission (NFSM):
    4. Stupid statistics

Prologue

Economic Survey Chapter 8: Agriculture and Food Management. SIX subparts:

  1. Fertilizer subsidy & schemes, Budget-2014 announcement
  2. Minimum support pricing, Sugar pricing, Procurement reforms
  3. National food security act (NFSA)
  4. WTO Bali Summit
  5. APMC reforms, National market for agriculture, NSEL crisis
  6. El Nino and its impact on Indian monsoon

[Act 1] Fertilizers: Botany /Chemistry angle (NCERT)

  • Source: NCERT Biology Class11, Ch.12

Essential elements classified into two parts:

Macro nutrientsMicro Nutrients
  • Absorbed from H2O and CO2: Carbon, hydrogen, oxygen
  • Absorbed from Soil: nitrogen, phosphorous, sulphur, potassium, calcium and magnesium
Iron, manganese, copper, molybdenum, zinc, boron, chlorine and nickel.
present in large amount in the tissueNeeded in very small amount

 

Nutrient deficiency in plant
NutrientSymptoms visible inWhy?
  1. nitrogen, potassium
  2. magnesium
olderleaves
  • because during deficiency, the older leaves transfer these nutrients to younger leaves
  • Nitrogen deficiency: Choruses – loss of Chlorophyll, delayed flowering
  1. sulphur
  2. calcium
youngerleaves
  • because calcium and Sulphur are immobile, older leaves cannot transfer them to younger leaves
  • Calcium deficiency: Necrosis- death of leaf tissue
  • Sulfur deficiency: retarded cell division in plant, delayed flowering, retarded cell division.

if soil is deficient in any nutrient, we’ve to artificially fill it up with fertilizer or manure.

so, What’s the difference?
FertilizerManure
Inorganic saltNatural substance from decomposition of organic waste.
doesn’t provide humus to soilyes, provides
rich in nitrogen, phosphorous, potassium (depending on composition)less rich
prepared in factoriesprepared in fields

 

Important FERTILIZERs
FertilizerRatio*source
Nitrogen (Urea)4
  • Urea (Neptha + fuel oil)
  • 25% demand met through imports. Only government agencies can import.
Phosphorous280-85% via import
Potash1100% via import

*Ideal ratio for Indian soil

[Act 2] Subsidies: Where is it counted in budget?

Fertilizer subsidy Buget classification
Budget type: revenue vs. capital

revenue partcapital part
receiptExpenditurereceiptExpenditure
  • Tax
  • Non-tax
subsidy counted here

Budget type: plan vs Non-plan

Fertilizer subsidy non plan Expenditure

Total ReceiptsTotal Expenditure
revenuereceiptscapitalreceiptsplan Expenditurenon plan Expenditure
revenueExpenditurecapitalExpenditure
subsidies counter here

Ranking of Subsidies

Budget 2014 Revenue Expenditure subsidies

Ranking 2013Food > Petroleum > fertilizer
Ranking 2014Food > Fertilizer > Petroleum

Amount of Subsidies (Cr.)

SubsidycomponentRE-2013Jaitley fullBE-2014
Food92000115000 (same as Chindu interim)
Fertilizer6797172970(increased over Chindu interim)
Petroleum*8548063427(same as Chindu interim)

* given to state-run oil companies for selling fuel, LPG and kerosene below cost price.

Fertilizer subsidy internal ranking

Jaitley budget 2014Rs. Crore
  1. Urea Domestic
36000
  1. Decontrolled Fertilizers (Phosphorous, Potassium)
25000
  1. Urea Imported
12300

Ranking: Domestic urea >> (P,K) >> Imported Urea

[Act 3] What is Nutrient Based subsidy (NBS)?

  • Launched in 2010. Before that, we had “product based subsidy”.
  • Under NBS, govt. gives subsidy based on weight of the different Macro/micro nutrient in the fertilizer.
  • In this way, fertilizers companies can make new product mixes with micro-nutrients, according to soil requirement in each region.
  • And farmers can afford to buy these tailor-made fertilizers because government gives subsidy to keep them cheap.

Disadvantages of NBS?

  • Urea not covered in this scheme.
  • Delay in NBS subsidy payments.
  • Therefore Fertilizer companies focus more on Urea more than other fertilizers.
  • Result: shortage of (Cheap) non-urea fertilizers.
  • So, farmers also overuse Urea. ideal ratio of NPK disrupted
Nutrient Ratio in soilIdealreal
Nitrogen (N)48.2
Phosphorus (P)23.2
Potassium (K)11
  • Result? Ground water pollution, Soil fertility declined, especially in Punjab and Haryana
  • Additional nitrogen doesn’t improve crop yield beyond a point.
  • Farmer doesn’t move to specialized fruits, vegetable, horticulture cropping- because they require special non-Urea fertilizers, which are not easily available at cheap rates.
  • So, one hand, tax payers pay for subsidies (and MSP), yet consumers still suffer from food inflation due to low production.
  • Shortage of coal and natural gas has decreased Urea production. Government has to import from abroad.

Urea smuggling

UP, Biharurea smuggled to Bangladesh and Nepal
Maharashtra, Gujarat and HaryanaUrea smuggled to chemical industries- especially in dyeing, inks, coatings, plastics and paints.
  • Result: nearly 3 million tonnes of Urea, doesn’t reach farmers.
  • And since Government gives Rs.5360 subsidy PER tonne to urea companies so imagine the loss of public money!
  • Thus fertilizer subsidy hurts everyone: farmers, firms, taxpayers, and consumers

Economic Survey reforms:

  1. Add Urea in the NBS regime.
  2. Pay fertilizer subsidy directly to farmer (i.e. by bank transfer) as per Nilekani Task force recommendations.
  3. Then, fertilizer companies & their middlemen will have no benefit in smuggling.
  4. Encourage Indian companies to setup joint ventures with foreign fertilizer companies.
  5. Enter in long term fertilizer supply agreement with foreign countries.

[Act 4] Budget-2014 on Agriculture

Soil Health card

  • Mission mode project (100 crores)
  • For all farm lands
  • 100 Mobile Soil Testing Laboratories to be Set up
  • A computerized system will facilitate local agriculture science centres to keep details of ‘soil test’ results of their area.
  • The system will give allot a unique number to ‘Soil Health Card’ of each soil sample.
  • The card will carry crop-wise recommendations of nutrients and fertilizers
  • This way, any change in ownership of the farm lands will not create any problem in updating the information

 Gujarat’s soil health card projects

  • 2006: Gujarat becomes the first state to launch Soil health card scheme.
  • First the soil properties tested-mineral composition, water retaining capacity etc.
  • Then farmer gets a soil health cards containing information on what kind of pesticides, fertilisers, seeds and how much water should be used, to get MAXIMUM productivity from his land.

National market & Food security

National marketFood security
  • Union will work closely with the State Governments to re-orient their respective APMC Acts.
  • Will help establishing private market yards/ private markets.
  • Will help develop Farmers’ Markets in town areas to enable the farmers to sell their produce directly.
  • We’ll restructure FCI
  • to reduce losses in transportation and distribution losses
  • We’ll enhance the PDS efficacy. (Efficacy = Capacity or power to produce a desired effect)
  • Even if there is inadequate rainfall (to due EL NINO), we’ll still provide wheat and rice at reasonable prices to poors.
  • If and when required, we’ll sell FCI’s foodgrains in open market to keep prices under control (for the middle class)

AGRO Finance

Bhoomi Heen Kisan
  • Don’t have land titles, so banks don’t give them loans easily, they become victims of moneylenders.
  • Via NABARD, Government will give loans to 5 lakh such landless farming groups.
PSU Banks
  • Will give 8 lakh crores as agriculture loans.
  • Last year’s target was 7 lakh crore and Sarkaari banks achieved it.
  • Agro Credit giving banks: Scheduled Commercial Banks > Cooperative Banks> Regional Rural Banks
Interest subvention
  • Existing: farmer gets loan @7%
  • New: if he pays EMI on time, will get 3% interest subvention (meaning government will pay that much interest on his behalf)
RIDF
  • NABARD operates the Rural Infrastructure Development Fund (RIDF).
  • Corpus enhanced to 25,000 crores.

AGRO Funds

Numbers not important
National Adaptation Fund100 cr
  • To combat climate change, protect agriculture from vagaries of climate change
Price Stabilization Fund.500 cr
  • To combat agriculture price volatility
Warehouse Infrastructure Fund (5k cr.)
  • To prevent wastage of food produce
PRODUCE200 cr
  • Producers Development and Upliftment Corpus (PRODUCE)
  • Via NABARD: To increase profitability of small and marginal farms.
Long Term Rural Credit Fund (5k)NABARD To provide refinance to cooperative and RRBs
Short Term Cooperative Rural Credit (50k cr.)
  • Government will give money to NABARD for agro loans, so NABARD doesn’t have to borrow from market.

AGRO R&D support

Research
  • Existing: Indian Agricultural Research Institute, Pusa
  • Proposed: two more in Assam and Jharkhand
TeachingAgro universities @Andhra + Rajasthan
HorticultureUniversities [email protected] + Haryana
Soil testing labs100 mobile labs across country
blue revolution in inland fisheries50 crore
Kisan TV
  • New channel (100 cr)
  • Will show programs for new farming techniques, water conservation, organic farming etc.
Indigenous cattle breed50 crore

Appendix:

  • This appendix contains the topics, scheme discussed in Economic Survey.
  • Beyond that, remaining (truckload of schemes), FDI conditions already under the [Food processing] Article series. click me.

Indigenous cattle breed

Bovine productivity
World average2238 kg/year
India1538 kg/year
  • This is mainly due to low genetic potential of indigenous cattle breed, shortage of fodder and prevalence of diseases.
  • There 37 recognised indigenous cattle breed in India- Gir, rathi, Sahiwal, Kasaragod Dwarf, Kankrej etc.
  • 2013: Animal Husbandry Department launched a project to conserve indigenous breeds.
  • Indigenous cattle breeds are better than exotic cattle breed due to following reasons:
    1. resistant to climate change and diseases
    2. need less fodder
    3. suitable for drought work
    4. Although they give less milk but its quality better than that of hybrid or cross breed cattle.

Existing Agriculture extension services

Technology
  1. National Mission on Agricultural Extension and Technology (NMAET). FOUR submissions on Agriculture Extension, Seed and Planting Material, Agricultural Mechanization, Plant Protection & Quarantine
  2. District-level Agriculture Technology Management Agencies (ATMAs)
helpline
  1. Kisan Call Centre schemes
  2. SMS portal for farmers.
  3. Agri-Clinics and Agri-Business Centres (ACABC)
ICAR
  1. National Initiative on Climate Resilient Agriculture (NICRA). With focus on developing need seeds/plants that are tolerant to high temperature and shortage of water.
  2. Krishi Vigyan Kendras (KVK)
weather
  1. Earth System Science Organization (ESSO) issues agro-meteorological advisories in 12 languages to 600 districts
  2. Gramin Krishi Mausam Sewa.
seeds
  • 100% FDI permitted for seed Development.
  • simplified procedures to introduce new varieties from OECD’s seed scheme

2013: launched Seed rolling plan to identify good domestic seed varieties & improve their production, preservation. (expires in 2016-17)

Nutrifarms
  • To introduce new crop varieties rich in micro-nutrients such as iron-rich bajra, protein-rich maize, and zinc-rich wheat
  • as a sub-scheme of RKVY Rashtriya Krishi Vikas Yojana

National Food Security Mission (NFSM):

Do not confuse between “ACT” and “MISSION”.

National food securitywho?
Act(for giving cheap grains to junta)Dept. of Food and public distribution under consumer affairs ministry
mission(for increasing agro production)Ministry of agriculture (discussed below)

Food security mission has FIVE components:

  1. Rice
  2. Wheat
  3. Pulses
  4. Millets (coarse cereals)
  5. Commercial crops- cotton, sugarcane and Jute

+cotton development program added recently

Targets @end of 12th FYPMillion tonnes
Foodgrains25
Rice10
Wheat8
Pulses4
Coarse cereals3

Related: Rashtriya Krishi Vikas Yojana (RKVY)

Stupid statistics

Agriculture growth rateincluding fishing and forestry4.7%
contribution to GDP
  • Agriculture: 14% (exact number 13.9)
  • Ranking: service > industries > Agro & allied
Contribution to employmentAgro > Services > industries (Ref. Survey box 1.2)
Contribution to total inputs in economyIndustries > Services > Agro (Ref. Survey box 1.3)

 

Employment Question
Assertionin recent years, the real farm wages have increased
Reasonthere has been a shift from farm to non-farm employment
Correct answerboth right and R explains A, because Economic Survey says so

 

Rainfall and irrigation trivia
75%Of annual rainfall comes from south-west monsoon (from June to September). During El Nino, it’ll decline to 70%
60%Of total foodcrop & oilseed grown in kharif season
35%Of areable area is being irrigated
45%of net cropped area, is irrigated.

Mrunal recommends

  1. (free) NCERT, NIOS, TN-Books
  2. Environment by ShankarIAS
  3. Indian Polity M.Laxmikanth (Hindi | English)
  4. Art & Culture by Nitin Singhania (Hindi | English)
  5. Spectrum: Modern History (Hindi | English)
  6. Bipin Chandra: Post Independence
  7. Fast-track to Arithmetic Rajesh Verma
  8. MK Pandey’s Analytical Reasoning
  9. Disha’s Topicwise Paperset (Hindi | English)
  10. School Atlas
  11. Mains: Language papers
  1. (free) NCERT, NIOS, TN-Books 4 History,Geo,Sci
  2. Indian Polity M.Laxmikanth (Hindi | English)
  3. Spectrum: Modern History (Hindi | English)
  4. Maths: Quantam CAT Sarvesh Kumar
  5. Objective General English SP Bakshi
  6. Word Power made Easy -Norman Lowe
  7. Topic wise Solved Paperset by Disha


So far 53 Comments posted

  1. himanshu tyagi

    Thank u very very much sir

  2. amit

    Sir, thanks for your great work. considering very short time left for pre, will you able to provide matter on initial chapters , which seems more important.

    1. Mrunal

      Amit refer to the powerpoints and videos for inital chapters. it’s not possible to release their articles before prelims.

      1. B+ve

        A setback for the guys who uses limited data pack of 3G…was hoping +vely

      2. Ahmed Raza

        Sir how many article is left before prelim?

  3. ashok bishnoi

    awesome

  4. bhavya

    Thank you sir for your effort.Sir,please create one thread after prelims for the search of hostels in old rajendhernagar, karolbagh, mukerjeenagar etc., It will save time,money,energy of so many aspirants.Thank you very much.

    1. ankit

      mrunal.org for the guys who are doing self prep. and its the step to make upsc aspirants to prepare efficiently NOT for coaching institutes…

  5. sujoy

    sir plz explain how to do that “graph” question in csat ?
    every year upsc asks a single question on it
    plz throw some light if possible…

  6. vinay jain

    Hi. Mrunal
    Can we get the copies of our CSE mains answer sheet by using RTI.if yes,then kindly tell me the procedure for it.
    Regards
    Vinay

  7. Lord DUFFERin

    Where do the farmers sell their produce, when not selling to the government?

    1. Mrunal

      Lord Dufferin, farmers can sell grains at the APMC mandi. If they’re not getting good price, they can opt for Government’s MSP.

  8. Raptor

    Just wanted to confirm something. El Nino officially didn’t arrive this year right? Because monsoon was late but nevertheless, it arrived and fed most regions well.

  9. Raptor

    Nevermind. Read the El Nino article by Mrunal.

  10. SAKSHI

    A and B start from the same point and in the same direction at 7 a.m to walk around a rectangle field 400*300 m, AandB walk at the rate of 3 km/hr and 2.5km/hr respctvly. how many times shall they cross each other if they continue to walk till 12:30 p.m

    1. Maharaj

      @Sakshi
      In these type of questions always proceed with concept of relative speed
      Speed of A – 3 km/hr
      Speed of B – 2.5 km/hr

      relative speed in advantage of A = 3.0 – 2.5 = 0.5 km/hr
      when you take this concept you assume that one is stationary (in this case B) and only A is moving (since it has advantage in relative speed)

      So B stays at starting point and A moves around a rectangular field 0f perimeter = 2 * (400+300) = 1400 mts = 1.4 km

      So it means to pass B , A has to cover distance of 1.4 Km
      so Distance = 1.4 km
      Speed ( in this case relative speed) = 0.5 km/hr
      hence time taken to pass B by A – 1.4 / 0.5 = 2.8 hr = 168 minutes
      Means, A takes 168 minutes to pass B When they walk relatively
      So in 5 hrs and 30 min = 330 minutes

      A will cross B only once as 168*2 = 336 min but that is greater than 330 min

      Hence it will cross B only once.
      ( if any problem do tell where you did not get it )

      1. SAKSHI

        OK CONCEPT CLEAR THANKS LOT 🙂

      2. Hriti

        nicely explained. thanks.

    2. Akshat

      In these types of question take the ratio of the speeds as in this case 3:2.5 => 30:25, now reduce this ratio to the lowest form like 6:5 and then take difference 6-5 = 1. So they will meet only once.

      if they are moving in opposite direction then u have to add them 6+5 = 11

  11. Hriti

    I have another question..plz attempt this as well..

    28 steps – A is at 1st step and 28th step..with A taking 1 step at a time, and B taking 2 steps at a time.Both start simultaneously..at which step do they meet.

    Plz help me, how to go abt such questions..lot of confusion..

    1. Maharaj

      @Hriti
      Assumption : both A and B start simultaneously and at same speed
      A takes one step at a time; this he does say “X” times
      So after X time he will be on step no = 1+X

      At the same time B takes 2 steps downwards at a time and B also does this “X” times as A has done “X” times

      So after “X” times , B will be at step = 28 – (2*X)

      So if they meet both equations have to be equal

      1+X = 28 – (2*X)
      X = 9

      Meaning they do it 9 times
      This implies that they are at ( if you take A’s equation ) = 1+X = 1+9 = 10th step
      OR if you take B’s equation = 28 – (2*X) = 28 – (2*9) = 10th step

      So answer : 10th step

      So to meet them both have to be equated

      1. Hriti

        thanks Maharaj, i got ur logic towards the approach. But one doubt –

        for A u have X+1(X steps + 1 to indicate he was there at step 1) , but for B, 28 – 2X (not considering the step on which B is) ?

        1. Maharaj

          @Hriti
          Do not get confused
          Look at equation 1 of A : 1 + X ( the step on which A is + how many times does he does this act of climbing 1 step at a time)

          now take a look at equation of B : 28 – (2*X) [ the step on which B is – no of times he does his act of coming down 2 steps at a time { here 2*X because X is the activity of climbing 1 stairs upwards or coming 1 step downwards}]

          So in both cases of the equation i have takes the step at which presently A and B are.
          Hope ur crystal clear now

      2. Nikhil

        nice explanation Maharaj , my approach is a bit different though

        initially the distance between them is of 26 steps and after each stride taken by both of them distance reduces by three steps so an AP generates 26,23,20,17 and so on the term which will be zero or the first term before negative term will be the step where they will meet

        1. Maharaj

          @Nikhil
          Every question has multiple ways of solving
          Many short cuts, but my aim here is to kill the beast itself ” Even if you do not have a short cut or encounter a never before done question, still you re able to do them and that too correctly”

          As i am always guided by one motto ” Never feed a fish to hungry. Teach him to catch fish himself and by doing this you have you have quenched his hunger for lifetime”

          1. Nikhil

            i was just telling my approach , you are doing a commendable job and olready appreciated your explanation in previous comment 🙂

          2. Hriti

            thanks to both Nikhil and Maharaj.

            @ I got it this time. Lemme apply it to some questions to get hands on. Thanks once again..

            I guess I read ur guiding motto somewhere…i think at ICICI CSR adv..

          3. sunil yadav

            See this solution !
            Since A and B are coming towards each other so relative velocity(not speed) of A w.r.t B = 3 steps per second so 28 steps will be covered in 9.33 seconds take it as a 9 seconds so A travelled for 9 seconds and in 9 seconds steps covered = 9 + 1( on which A was originally at) hence ans = 10th step
            Whenever 2 bodies move relative to each other use the concept of relative velocity with it u can give ans in seconds (without using pen) + it doesnot use equations or A.P which are error prone..

  12. Rounak

    Can anybody share the trick of solving question like “if there is storm light will not blink. Only if light blink flight take off”..

  13. Neha

    Hello! Mrunal I am done with all my previous 4 attempts. I am 26 years old and fall in general category. If I don’t give my attempt this year so can I appear next year. Because someone was saying that we have to give exam this year otherwise we are not eligible for attempting upsc exam next year.

    1. Neha

      Anybody please clear the status of my question..its urgent.

      1. TS

        If u gave exam in 2011,you will get another attempt in 2015….first point..
        Such restrictions are not mentioned in notification….

      2. Maharaj

        And if you were asking about an extra attempt for those who appeared in 2011 , i personally do not know
        As Mr jitendra Singh’s statement “Candidates who appeared in Civil Services examination 2011 may be given one more attempt in 2015” here mentions may…up till now no conditions applied that you have to give 2014 exam to be eligible for 2015..

  14. aman

    can someone plz tell me the meaning of 5/25. mentioned in union budget 2014……

    1. MyID

      Banks can give loans to real estate firm and can fix the amortization period for say 25 years with periodic refinance facilities in say 5 years. Meaning real estate firm can pay loan (principal and interest) amount via installments in 25 years and can also get refinance facilities in 5 years. It will be good for real estate sector as most of the projects take longer time to complete and become commercially viable.
      I hope it is clear enough.

  15. sachin

    Thank u very much

  16. anil

    Thanks for everything sir……you helped us a lot…and we r getting tensed when ubr uploading new articles……sir we are trying very hard to read but those r not getting to mind …so i think no more new updates frm u and once again thank alot ….

  17. sonali kadam

    vidyanagar,karad

  18. vijay pal sidh

    sir can u give some info about rajasthan five year’s plan in hindi …….. many many thanks in advance……

  19. chintankumar

    Nice and helpful info.

  20. shweta

    sir, why was urea not covered in nutrient based subsidy earlier when others where included? on what basis was urea subsidised previously?

  21. saurabh verma

    please include a downward arrow as you include upward

    1. Mrunal

      yes Saurabh, I was thinking about the same.

      1. Jude_Prudence

        And an option to “Print” at the start of article only.

  22. ranjana yadav

    msp and cacp what the meaning

  23. Uday

    Q. If Urea is also subsidised but not under NBS then how does it encourage the companies to produce more urea than any other fertilizers ?

  24. Pawan

    Economics was never so lucid.. (y)

  25. ramesh

    i am prepare cse exa my optional agriculuture sir i read basic books ad well as preparation

  26. CHANDAN KUMAR BEHERA

    Sir,Please rectify the soil health card scheme.It is originally started by PM narndra modi at Rajasthan and punjab is the 1st state to implement this soil health card scheme..Please rectify it..You are mentioned that Gujurat….

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