International Conference on Global Trends in Engineering, Technology and Management (ICGTETM-2016)
Bureaucracy: A Study of Distribution Process of Agriculture
Subsidy in India
Harshal Anil Salunkhe
Asst. Prof. Department of Business Administration,
SSBT’s COET, Bambhori, Jalgaon Maharashtra India
distribution in India and how will the subsidy is
distributed to farmers.
Abstract
The government of India provides subsidy to
farmer every year. The bureaucratic process play
very important role in distribution of subsidy to
farmers. The government provides lot of amounts
of subsidy to farmers but it’s not reached to them
100%. As per the farmer’s opinion, there is
problem in distribution system. In this paper
researcher has study about the bureaucratic
process with reference distribution of agriculture
subsidy in India with help of primary data (survey
of farmers in Jalgaon District) & secondary data.
The researcher has construct two hypothesis for the
study.
Keywords-
Subsidy,
Bureaucratic
Process,
Farmers & Distribution
I.
INTRODUCTION
The central & state government of India provides a
large amount of subsidies to agricultural irrigation.
In 2004 the percent of irrigated land in India was
31.63% & year 2010 was 35.12% as compared to
total agricultural land. On other side corrupt
practices in agriculture sector also increases. In
Nov, 2005 National Agricultural Cooperative
Marketing Federation of India (NAFED) Scam 250
crores & Jan, 2009 India (NAFED) face criminal
action in a Rs.3,700 crore fraud. Day by day
corruption increases in agriculture sector Farmers
are not happy with the overall condition of farmers
in India. This is despite the fact that the
government of India claims to have introduced
many schemes and policies to improve their
condition. Most respondents (50 per cent) feel that
only rich farmers got the benefits of government
schemes and policies related to farming. Only 10
per cent believe that poor and small farmers have
got the benefit from farming related schemes and
another
8
per
cent
saw no
benefit
whatsoever either to large farmers or marginal
farmers. The subsidy is one of the important parts
of farmer’s life. With help of subsidy farmers can
yield crops. But for getting subsidy he faced so
many problems and he demotivated towards
farming. In this paper researcher has study about
bureaucratic process of agriculture subsidy
ISSN: 2231-5381
Government subsidy programs, like many areas of
government spending, are at risk of corruption and
fraud that price taxpayers millions of dollars. The
extent to which these two factors affect subsidy
policy is difficult to fully estimate because it is not
commonly detected or reported to official sources.
Accurate figures are difficult to obtain, and
governments are also often unwilling to publicize
occurrences of fraud and corruption out of fear of
bad publicity or public concern at their lack of
oversight. According to GSI is concerned that fraud
and corruption are not being sufficiently addressed
in order to remove what may be a significant
barrier to subsidy reform. The corrupt bureaucratic
practices not only done in India but also happen all
over the world. In South Korea’s Rice Subsidy
Scheme set up to cushion rice farmers from the
opening of the Korean market to foreign imports
Rice farmers were eligible to receive subsidies.
However, from 2005-08 it has been estimated that
over US$100 million in government funds intended
for rice farmers were instead distributed to tens of
thousands of fraudulent applicants, including many
public servants who were land owners but not
farmers. The process for applying for the subsidy
did not require applicants to prove they were
actually farming the land for which they were
making claims. 7 All elements of the definition of
fraud were evident. The government was
wrongfully and intentionally deceived by
applicants claiming to be actively farming parcels
of land. The payouts constituted a financial loss for
the government and a personal gain for the
applicants.
For this study researcher has constructed two
hypotheses, The Bureaucratic Process is major
hurdle in distribution of government subsidies to
farmers and there are leakages in distribution of
government subsidies to farmers. For testing the
hypothesis researcher has used statistical software
(minitab). The researcher has used primary &
secondary data for study. The primary data
collected through the survey of five hundred
farmers in Jalgaon District. And secondary data
collected through websites & research papers.
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International Conference on Global Trends in Engineering, Technology and Management (ICGTETM-2016)
II. THE DISTRIBUTION OF SUBSIDIES
IN INDIA
Many subsidies are defended as benefiting
disadvantaged groups, or groups the politicians like
to make us believe are disadvantaged. Some do
that, but even those that do benefit disadvantaged
groups often benefit richer people or companies
even more.
Perversely, the distributive consequences of
subsidies are often precisely the opposite of what
the framers of the policies (Sharma, 2000)
(Corruption in the Land Sector, 2011) intended.
Yet, by design, subsidies that are tied to outputs or
inputs intended. Yet, by design, subsidies that are
tied to outputs or inputs tend to favor larger
producing units. The conduit between a
government and the intended recipient of a subsidy
is often more like an open sluice than a pipeline,
with plenty of opportunities for others to dip into
the stream before it reaches its final destination.
Any subsidies that are linked to the production of a
good or services require the recipient to spend
money on inputs used in producing that good or
service. For example, if a farmer is paid by the
government to grow corn, she will first have to
spend some of that money on seeds, fertilizers,
pesticides and fuel for the tractor. What is left as an
increase in income may be only 20% or 25% of the
cost to the government.
Economists call the ratio between what ends up in
the pockets of the target group and what the
government spends the transfer efficiency of the
subsidy. Subsidies for the purchase of inputs, by
lowering the producer's costs, can have fairly high
transfer efficiency, but only if the supply is not
limited. If the seller of the subsidized good is a
monopoly, or there is a finite supply of the input,
the subsidy will mainly enrich the input provider.
•
•
•
Adhar Card/ Ration Card
Residence Proof
Inquest report by Government officer (
Village Secretary)
•
Saving Account in Bank
Government
Via Bank/
Government office
End Users Bank Account (Farmers)
Figure No.1- Direct Distribution of Subsidy to Farmers
In India agricultural subsidies are distributed on
centralized basis. The indirect form of subsidies are
distributed by government to agricultural vendor
(mediator) e.g. Fertilizer Company, Pipe Company,
Mechanized farm Equipment Company and
Electricity distribution company and through
agricultural vendor to end users i.e. farmer
The farmer want to buy tractor from tractor dealer,
it would cost Rs. 5,00,000/-. He has pay
Rs.4,50,000/- to tractor dealer and Rs.50,000/- is
paid by government on behalf of farmer to dealer.
Another example regarding electricity subsidies,
Rate of per unit electricity Rs. 6 but for farmers it
will be only Rs.4 and remaining Rs. 2 paid by
government to electricity board on behalf of
farmer. In special case, i.e. losses of crops due to
natural disaster total amount of electricity bill paid
by government to electricity board on behalf of
farmer. The same type of method is adopted in
fertilizers and Pipe Company for irrigation.
Government
The subsidies can be distributed among individuals
according to a set of selected criteria, e.g.
Agricultural Venders
(Fertilizers and Seeds Company, Bank etc)
1) Merit
2) Income-level
3) Social group etc.
The rules and regulation is made by the state and
center government.
III. HOW TO DISTRIBUTE SUBSIDY TO
FARMER
The direct subsidies are given by government to
farmers through the bank. It includes crop finance,
to make well in farm, compensation for losses due
to natural disaster.
The documents require for getting direct subsidy
ISSN: 2231-5381
Farmers
Figure No. 2- Indirect Distribution of Subsidy to Farmers
IV. HYPOTHESIS TESTING
The searcher has done survey of 500 farmers in
Jalgaon District. To know the opinion of farmers
related to government distribution system related to
agriculture subsidy to farmer’s & difficulty faced
by farmers for getting agriculture subsidy from
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International Conference on Global Trends in Engineering, Technology and Management (ICGTETM-2016)
government. The researcher has design two
hypothesis for study.
H0-Bureaucratic Process is not major hurdle in
distribution of government subsidies to farmers
H1-Bureaucratic Process is major hurdle in
distribution of government subsidies to farmers
Table No.1-Bureaucratic Process Is Major Hurdle in
Distribution of Government Subsidies to Farmers
Bureaucratic Process is
Count
%
Hurdle
Yes
403
80.60%
No
97
19.40%
Grand Total
500
100%
Source- Primary Data
In Above table, out of 500 respondents, 80.60%
(403) respondents agree that bureaucratic process is
not major hurdle in distribution of government
subsidies to farmers & 19.40% (97) respondents
disagree that bureaucratic process is not major
hurdle in distribution of government subsidies to
farmers.
The below table shows that out of 500 respondents,
82 respondents agree that corruption is major
hurdle for getting subsidies, 126 respondents agree
that documentation is major hurdle for getting
subsidies, 101 respondents agree that rules &
regulation is major hurdle for getting subsidies and
177 respondents agree that lack of awareness is
major hurdle for getting subsidies
Table No.3 -Types of Hurdles Faced By Farmers
Types of Hurdles
Count
%
Corruption
82
17%
Documentation
126
26%
Rules & Regulation
101
21%
Lack of awareness
177
36%
Grand Total
486
100%
Source- Primary Data
Since P_Value is less than 0.05 (L.O.S.), the null
hypothesis is rejected and alternative hypothesis is
accepted by researcher. The bureaucratic process is
major hurdle in distribution of government
subsidies to farmers
Code
N
Mean
St. Dev
SE Mean
Yes
15
26.87
4.02
1.0
H0-There are no any leakages in distribution of
government subsidies to farmers.
H2-There are leakages in distribution of
government subsidies to farmers.
No
15
6.47
3.54
0.91
Table No.4 -Leakages in Subsidies Distribution System
Table No.2-H1 Two-Sample T-Test (MINITAB Code):
Source- Minitab Software
In above table mean value of code Yes is 26.87,
standard deviation is 4.02 & SE mean is 1.0. And
mean value of code No is 6.47, standard deviation
is 3.54 & SE mean is 0.95.
Results-
Leakage in Subsidy
Distribution System
Count
%
Yes
441
88.20%
No
59
11.80%
Grand Total
500
Source- Primary Data
Difference = μ (No) - μ (Yes), Estimate for
difference: 20.40, 95% CI for difference: (17.57,
23.23) T-Test of difference = 0 (vs ≠): T-Value =
14.75 P-Value = 0.000 DF = 28, both use Pooled
Standard Deviation = 3.7866
Boxplot of H1
In Above table, out of 500 respondents, 88.20%
(441) respondents agree that there are leakages in
distribution of government subsidies to farmers &
11.80% (59) respondents disagree that there are
leakages in distribution of government subsidies to
farmers.
Satisfied Bureaucratic Process
35
Table No- 5 Two-Sample T-Test (MINITAB Code):
30
25
N
Mean
St. Dev
SE Mean
No
15
3.93
1.71
0.44
Yes
15
29.40
2.35
0.61
Code
20
15
10
5
0
No
Yes
Source- Minitab Software
Figure No. - 3 Box plot of H1
ISSN: 2231-5381
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International Conference on Global Trends in Engineering, Technology and Management (ICGTETM-2016)
In above table mean value of code Yes is 29.40,
standard deviation is 2.35 & SE mean is 0.61. And
mean value of code No is 3.93, standard deviation
is 1.71 & SE mean is 0.44.
Result
Difference = μ (No) - μ (Yes),
Estimate for difference:-25.467,
95% CI for difference: (-27.006, -23.928)
T-Test of difference = 0 (vs ≠):
T-Value = -33.90 P-Value = 0.000
DF = 28 both use Pooled Standard Deviation =
2.0575
Boxplot of H4
35
Leakages in Distribution
30
25
20
15
10
5
V. CONCLUSION
Due to lack of proper implementation of subsidies
in distribution program, they are not reached to
farmers. If Government directly transfers the
amount of subsidies to farmers account, it reduces
the middle man role and reduces leakages in the
distribution system. The Government should make
single window for the farmers regarding collection
of documents which are required to take the
subsidy. Government should adopt E-Governance
practices to increase the transparency in the
distribution system of subsidy. This practice
reduces corruption in subsidy distribution. The
Government
wants
prevention of scam
&
corruption in agricultural department. Government
should
used corporate
governance
in the
agricultural department for more transparency &
protects farmer’s rights. The government should
make one common agency for distribution of
subsidy. Due to common agencies for distribution,
it is easy for the government to maintain account &
audit of subsidy, it help to reduce corrupt practices
of government officers.
0
No
Yes
VI. REFERENCES
Figure No.4 -Box plot of H2
There are leakages in distribution of government
subsidies to farmer and it highly affected due to
Lack of effective distribution management.
1) Anuradha Singh, A. R. State of Indian Farmers: A Report.
Centre for the Study of Developing Societies (CSDS), Delhi.
Delhi: Centre for the Study of Developing Societies (CSDS),.
Table No.6 -Types of Leakages in Distribution system
2) Corruption in the Land Sector. (2011, 04). Working paper .
The Food & Agriculture organsiation of the united nation.
Types of leakages
Count
%
Corruption
110
24.94%
Lack of Effective Distribution
Management
229
51.93%
Poor Government Policy
74
16.78%
Other
28
6.35%
Grand Total
441
100%
Source- Primary Data
3) Devoplment, I. I. (2010, 12). Corruption and fraud in
agricultural and energy subsidies: Identifying the key issues.
The global subsidy initative . Winnipeg, Canada: International
Institute of sustainble devoplment.
4) Salunkhe, H. A. (2015). The Study of Corporate Governance
and Legal Issue in Agriculture Sector in India. National Seminar
on Emerging Issues in Legal Aspects of Business. Jalgaon .
5) Sharma, R. D. (2000). Administrative Culture in India. New
Delhi: Anamika Publisher & Distributer .
Above table out of 500 respondents, 24.94% (110)
respondent agree that corruption is major leakage
of subsidy distribution system, 51.93% (229)
respondent agree that lack of effective distribution
management is major leakage of subsidy
distribution system, 16.78% (74) respondent agree
that poor government policy is major leakage of
subsidy distribution system and 6.35% (28)
respondent agree that other is major leakage of
subsidy distribution system.
Since P_Value is less than 0.05 (L.O.S.), the null
hypothesis is rejected and alternative hypothesis is
accepted by researcher. There is a leakage in
distribution of government subsidies to farmers.
ISSN: 2231-5381
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