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Agriculture sees biggest boost in allocation in Union Budget 2019

Finance Minister Nirmala Sitharaman presented her maiden budget in the Lok Sabha on Friday. The budgeted expenditure for 2019-20 was pegged at Rs. 27.86 lakh crore, a 13.4% increase over the revised estimates for 2018-19.

As usual, interest payments and subsidies (for food, petroleum and fertilizers) made up the largest components of the budget. 

Each rectangle in the visualisation below represents the percentage of total budget allocated under each sector.

In terms of allocation, agriculture & allied activities received the biggest push (74% absolute increase) among all sectors compared to FY19. A huge chunk of this allocation is expected to go towards the PM Kisan scheme.

In her budget speech, Ms. Sitharaman said that the government would invest widely in agriculture infrastructure and support private entrepreneurship for value addition in the farm sector. She also stressed on “zero budget farming“, a practice which involves zero credit and reducing dependence on chemical fertilizers.

Commerce and industry and energy are the sectors that saw a decline in absolute terms. Rural development saw a modest rise of 4.2%. 

With an increase in the budget expenditure, there is bound to be a rise in absolute terms across the sectors. Hence, it is imperative to look at what proportion of the budget was allocated to them.

For instance,  defence allocation, which saw a 7% increase in absolute terms, lost out in terms of proportion — in the 2018-19 budget estimates, defence accounted for 11.62% of the total expenditure, while in FY20, this dropped to 10.96% — a difference of 0.66 percentage points. In her speech, the Finance Minister said “defence has an immediate requirement of modernisation and upgradation”. She also announced waiver of basic customs duty for import of defence equipment not manufactured in India.

Agriculture, which formed 3.5% of the budget in FY19, comprised 5.4% of budgeted expenditure in FY20, an increase of 1.9 percentage points (the biggest rise). The visualisation below shows the proportion of budget in FY19 and FY20.

Another noteworthy aspect is the fact that the increase of budgeted expenditure in certain sectors is impacted due to the revised estimates. For instance, development of the Northeast, which was allocated Rs. 3,000 crore in FY19, saw a downward revision to Rs. 2,629 crore according to FY19 revised estimates. The allocation for FY20 is Rs. 3,000 crore, the same as FY19. For education too, the allocated budget for FY19 was Rs. 80,215 crore, which was pulled down to Rs. 83,626 crore in the revised estimates. 

The differences work the other way too. The FY19 revised estimates for agriculture (again the biggest gainer) and health were higher than the budget allocated originally in FY19.

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