ILLUSTRATION ON THE ALLOCATION OF FUNDS UNDER RASHTRIYA KRISHI VIKAS YOJANA

• Each state will become eligible to receive RKVY allocation, if and only if:
  • The base line share of Agriculture and allied sectors in its total State Plan (excluding RKVY funds) expenditure is at least maintained.
  • District Agriculture Plans and State Agriculture Plans have been formulated.

During 2007-08 the states would be exempted from formulation of the District Agriculture Plans as the State Plans have already been formulated and finalized in the meanwhile.

• Base line level of expenditure will be determined on the basis of the average percentage of expenditure incurred under agriculture by the State Government in the State Plan during the three years prior to the previous year (excluding RKVY funds). For instance, in case of State XYZ, the base line percentage expenditure is 5.1% which has been calculated as follows:

Baseline %age expenditure= %age expenditure during 3 years (excluding RKVY funds)(2003-4, 04-05, 05-06) = 15.2 ÷ 3 = 5.1%.

Additionality of expenditure over baseline in 2006-07 = 0.6(5.7%-5.1%) * 20,000/100 = Rs.120 crore.

• The expenditure by the state in 2006-07 (5.7%) has been over and above the baseline average of 5.1%. The State Government thus becomes eligible for grant under the RKVY provided it has also formulated District Agriculture Plans (this condition waived for 2007-08) and State Agriculture Plans. This is only an illustration. Actual calculations would be based on year for which expenditure figures are available.

• The expenditure above the baseline for the State XYZ is Rs.120 crore.

• To work out the assistance under the RKVY for 2007-08, DAC will add up all such expenditure above the baseline for all eligible states (say this works out to Rs. X crore) and then decide on the total RKVY assistance in 2007-08 (say Rs. Y crore), subject to the condition that about Rs X/2 will be allocated under the RKVY .

• Once the amount Rs Y crore has been determined, the allocation to each state for 2007- 08 will be worked out by the Planning Commission using the parameters and weights indicated in Annexure-II of the Guidelines i.e. 0.20* Y will be distributed using parameter 1 weight of each State, 0.30 * Y will be distributed using parameter 2 weight, and 0.50%*Y will be distributed using parameter 3 weight of each state.

• The allocation for each state having been worked out as in para 6 above, the grant will be provided to each state in two separate streams:
  • Stream-I: At least, 75% will be released to the states depending upon their proposing specific schemes as indicated in para 3.5 of the Guidelines, within this allocation.
  
  
  • Stream-II: The balance share of the state will be released, untied to any particular project as indicated in para 3.5 of the Guidelines.

• In case the total proposals by the states leaves some balance out of the total amount of allocation under Stream I, then this total balance will be distributed to all eligible states in accordance to the parameters/weights indicated in Annexure-II of the Guidelines.

Explanation:
Parameter 2 is based on the projected growth rates for GSDP for Agriculture and allied sectors as compared to a base year GSDP for Agriculture and allied sectors (say 2005-06).The GSDPs to be attained by the end of the 11th Plan by the states will be worked out. The parameter will be set in terms of inter state proportion of these GSDPs projected to be reached by the state by the end of the 11th Plan. This is illustrated below-

State	Target Growth Rate(%)	GSDP(Rs.Crores) of agriculture and allied activities 2005-06	GSDP compounded at target growth rate at the end of 5 years	Proportionate share of State in Total GSDP at the end of 5 years
State A	2.0	16333	18033	20.12
State B	5.3	19211	24871	27.75
State C	5.5	34541	45144	50.37
State D	4.6	1251	1566	1.76
Total		40249	89614	100