Data Focus

Crop insurance and interest subsidy top Centre’s agricultural spends

Radheshyam Jadhav Pune | Updated on September 30, 2021

Major initiatives like mechanization of farming, micro-irrigation and organic farming have received a minuscule share of the total expenditure


The actual total expenditure on important agricultural schemes and missions by the Centre has increased from ₹30,167 crore in 2016-17 to ₹41,417 crore in 2020-21. However, 75 per cent of the actual expenditure is on two schemes - Pradhan Mantri Fasal Bima Yojana (PMFBY) and interest subsidy for short term credit to farmers. Major initiatives like mechanization of farming, micro-irrigation and organic farming planned to introduce a paradigm shift in agriculture have received a minuscule share of the total expenditure. In the last five years the government has incurred expenditure of ₹1,75,533 crore on 13 major schemes according to the Ministry of Agriculture and Farmers Welfare data presented to Lok Sabha last month.

Many schemes implemented by the Department of Agriculture are providing subsidies apart from other components, on various aspects of agriculture like credit, insurance, mechanization, marketing, irrigation, seeds and other interventions.


The government spending on PMFBY is 36 per cent of the total expenditure on schemes in the last five years. The scheme was planned to provide a comprehensive risk solution at the lowest uniform premium for farmers. Premium cost over and above the farmer share is equally subsidized by States and the Centre. The government of India shares 90 per cent of the premium subsidy for Northeastern States to promote the uptake in the region. The average sum insured per hectare has increased from ₹15,100 during the pre-PMFBY Schemes to ₹40,700 under PMFBY. The PMFBY launched in 2016 has seen rising government expenditure for the last three years.

Also read: Telangana: HC directs the state to compensate farmers for crop loss

Interestingly, the data available with the Ministry of Agriculture shows that out of total farmers in the group of marginal, small and other farmers who opted for crop insurance in the Kharif season the number of marginal farmers has declined from 18.08 per cent in 2018 to 16.55 per cent in 2020. For Rabi season it has gone down from 19.18 per cent to 17.39 per cent during the same period.

Credit flow

The government sets the annual target for the flow of credit to the agriculture sector. The agriculture credit flow target has been set at ₹13.50 lakh crore for the F.Y.2019-20, ₹15 lakh crore for F.Y. 2020-21 and ₹16.50 lakh crore for FY 2021-22. To extend the reach of institutional credit to farmers, government provides interest subvention of 2 per cent on short-term crop loans up to ₹3 lakh. Presently, a loan is available to farmers at an interest rate of 4 per cent per annum on prompt repayment. According to Raju Shetti, farmer leader and former MP from Maharashtra even as the government claims that it is helping farmers to get credit, a huge number of small and marginal farmers are in the debt trap of private money lenders. Natural calamities, volatile markets, and government machinery’s approach force farmers to rely on private money lenders, he said.

Mechanization last on the list

Promotion of agricultural mechanization for in-situ management of crop residue has received just ₹1,749 crore from the government in the last five years, which is just 1 per cent of the total expenditure on agricultural schemes while sub-mission on agricultural mechanization received ₹4,220 crore ( 2%) during this period. The Government of India has released funds for various activities of farm mechanization like the establishment of custom hiring centres, farm machinery bank, high-tech hubs, and distribution of various agricultural machinery to different States. The government has planned this mission to maximize the productivity of the available cultivable area and make agriculture a more profitable and attractive profession.

Micro-irrigation scheme Pradhan Mantri Krishi Sinchan Yojana has received relatively more amount (₹12, 991 crore) compared to schemes other than PMFBY and interest subsidy for short term credit.


Published on September 30, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like