Underutilization of agriculture fund in Northeast

It is a paradox that cash-starved North-eastern states need financial assistance from the Central government the most but fail to utilize the funds released to them. Huge amount of central funds for agriculture sector left unutilized by the states in the region when distress of farm households has been on the rise is quite perplexing. The Department of Agriculture, Cooperation and Farmers Welfare had to surrender Rs 21,044 crore in 2018-19 and Rs 28,581 crores in 2019-20 to the Ministry of Finance as the amount remained unutilized, primarily due to poor utilization by the North-eastern states. The Department informed the Parliamentary Standing Committee on Agriculture that states not releasing 40 per cent of state share is one of the reasons behind less utilization of funds. Other reasons cited by the Central government department are non-submission of utilization certificates, late submission or proposals not approved by the State Level Monitoring Committees, inadequate proposals, and non-submission of proposals by National Bank for Agriculture and Rural Development (NABARD). The parliamentary panel in a report presented in the ongoing budget session of the Lok Sabha has flagged its concern that surrender of such large amount of funds would adversely affect the implementation of the schemes. Underutilization of budget outlays by NE states is a testimony of rhetoric around the brand Northeast by the Central government as well as the State government overshadowing the solutions to perpetual problems gripping the region.

The problem like non-submission of utilization certificates is not new but the solutions employed have not worked to improve the utilization. Withholding of the fund release of subsequent instalments due to non-submission of utilization certificates render even spending of the first instalment unproductive. Officials concerned are to be held accountable for non-submission of utilization certificates in time. The region will continue to grapple with the issue till an effective structural system fixing the accountability for underutilization of budget outlays is put in place. The Department's reply to the parliamentary panel reveals that the Central government has primarily left it to the states in the region to improve the utilization as agriculture is a state subject. The parliamentary committee, however, recommended to the Department to vigorously pursue with the State Governments and other organizations concerned for expediting the proposals and resolving the other related issues "promptly and to monitor at regular intervals the pace of expenditure and flow of funds under the various Schemes so as to avoid major surrender of funds. The "Mission Organic Value Chain Development for North Eastern Region Central Sector Scheme" is one key central sector scheme for development of Certified Organic Production in the region launched in 2015-16. The objective of the scheme is to promote to link growers of certified organic production with consumers and to support the development of the entire value chain starting from inputs, seeds, certification, and creation of facilities for collection, aggregation, processing, marketing, and brand building. The scheme is immensely beneficial for the farmers in the region which by default practices organic production in farm sector.

The assistance provided to the farmers under the scheme includes cluster development, on/off farm input production, supply of seeds/ planting materials, setting up of functional infrastructure, establishment of integrated processing units, refrigerated transportation, pre-cooling /cold stores chamber, branding, labelling, and packaging, hiring of space, hand holding, organic certification through third party, mobilization of farmers/ processors. The parliamentary panel observed that the Department was able to release only Rs. 481.66 crore as against allocations of Rs. 678.86 crore to the States during the period of 2015-16 to 2019-20. The underutilization of budget allocations was reflected in the region failing to achieve the targets set under the mission. Against the target of covering one lakh hectares 71,492 hectares were covered. The parliamentary committee recommended the Department to identify factors which are hampering full utilization of funds under the scheme and take corrective measures and hold consultation with State Governments which are not able to achieve the desired target. It is heartening to know from the Department's reply to the committee that consignments of organic produce from the region are going out of the region and growers have been able to sell their produce directly to supply chain actors without local middlemen after a set of corrective measures were taken. India has been expediting key connectivity projects for access to seaports in Bangladesh and connectivity projects in Myanmar to connect to the vibrant ASEAN economy. Boosting the production of farm produce which is both organic and are high in demand in the global market for rich nutrient value is critical to tap the potential of diversification of India's export basket when the projects are commissioned. It will be possible only when the northeast region is able to overcome the challenges of utilizing the entire budget outlays for agriculture sector in time.