By Naveen P Singh
Budget FY26 has aimed to revitalise India’s agricultural and allied sectors by addressing key structural challenges and introducing targeted reforms. Building on the previous year’s allocation of Rs 1.52 trillion, this Budget prioritises increasing access to affordable credit, expanding crop insurance, and promoting agri-value chains. With a focus on financial inclusion, production targets, and infrastructure development, the Budget seeks to enhance farmer incomes and drive sustainable agricultural growth. One of the major highlights is the increase in the limit of subsidised farm loans from Rs 3 lakh to Rs 5 lakh per farmer, a move aimed at broadening financial inclusion.
Additionally, the government has set an ambitious target of producing 30 million tonnes of pulses by 2030, and allocated Rs 109 billion in incentives for food processing to drive value addition. In the short term, the government could have continued with distribution of pulses for welfare schemes. The fisheries sector has also received a boost with a five-year investment plan of $9 billion to enhance infrastructure and productivity.
The government has recognised the role of agricultural research and education in driving long-term productivity and innovation. The Budget for agricultural research and education in FY26 is Rs 10,466.39 crore, reflecting a modest increase of 3.05% over the previous year. This increase, while positive, could have been more substantial, given the rising complexity and capital-intensive nature of modern agricultural research.
Tipping points
First, a significant concern addressed in this Budget is food inflation, which has been persistently high, crossing 10% year-on-year in late 2024. To tackle this, the government has extended duty-free imports of pulses and imposed selective export restrictions to maintain price stability. However, structural reforms, such as improving minimum support price (MSP) implementation and ensuring fair farmer remuneration, remain crucial areas for policy intervention.
Second, climate change risks, including erratic weather patterns and declining water resources, underscore the need for increased investment in resilient agriculture. The Budget outlines measures for irrigation, soil health management, and climate-adaptive technologies to protect farmers from economic shocks. These interventions reflect a growing recognition of the need for sustainable and climate-resilient farming practices. However, the government could have allocated more budget for natural resources management and particularly for mitigating the drought on a long-term through structural reforms in the agricultural sector. There is a need to link the enhanced allocations for Har Khet Ko Pani and micro-irrigation.
States’ participation
Third, the Budget emphasises the importance of a federal set-up in transforming the agriculture and allied sector. Agricultural reforms cannot be implemented effectively without the joint effort of states, as challenges vary regionally. A blanket intervention was required to collectively address these challenges, leading to the introduction of the Prime Minister Dhan Dhanya Krishi Yojana, targeted at 100 districts with low productivity, moderate crop intensity, and below-average credit parameters. This initiative covers over 1.67 crore farmers.
An interesting aspect of this intervention is the augmentation of post-harvest storage at the panchayat level, aimed at reducing post-harvest losses from farm gates to markets. By addressing logistical inefficiencies and improving storage facilities, the government seeks to minimise wastage and enhance farmer incomes.
Rural economy
Fourth, India’s rural economy, where nearly 65% of the population resides, is heavily dependent on agriculture. However, the sector faces significant challenges, including disguised unemployment (estimated at 25-30%), low productivity, inadequate infrastructure, and climate-induced vulnerabilities. According to the NITI Aayog, nearly 40% of farmers express a desire to leave farming due to economic distress. Additionally, rural wages have grown at a sluggish pace of 2-3% per annum, while agricultural productivity in India remains 30-50% lower than global benchmarks. These challenges contribute to large-scale rural-to-urban migration, with over 9 million people moving annually in search of better livelihoods.
To address these, a comprehensive multisectoral Rural Prosperity and Resilience programme has been launched in collaboration with state governments. This initiative focuses on skilling, investment, and technological integration to create sustainable livelihood opportunities in rural areas. By promoting agro-processing, digital agriculture, and climate-resilient farming, the programme aims to enhance rural employment and boost income levels. Strengthening market linkages and access to credit will further invigorate the rural economy, ensuring that migration becomes an option rather than an economic compulsion.
State institutions
Fifth, the central government’s partnership with states is crucial in implementing any initiative effectively. States play a pivotal role in identifying regional priorities, mobilising resources, and ensuring last-mile delivery. A coordinated approach—combining national policy frameworks with state-level execution—will maximise impact, ensuring inclusive growth. This collaboration will be key to transforming rural landscapes, fostering economic resilience, and securing a prosperous future for millions.
To achieve this, 100 developing agri-districts will be identified for targeted interventions, focusing on technology adoption, infrastructure development, and market linkages. This phased approach will facilitate a structured implementation, ensuring measurable improvements in farm output, rural incomes, and overall agricultural resilience. By leveraging global expertise and financial support, India aims to modernise its agricultural landscape, making farming more sustainable and profitable for millions of rural households.
Institutional support
Sixth, the Budget highlights key interventions aimed at boosting agricultural productivity, value addition, and market access through the establishment of institutions and targeted programmes. The government has announced the creation of mission on cotton, pulses, fruits and vegetables, and hybrid seeds. A Makhana Board in Bihar is to be supported for the production and export of makhana, a crucial cash crop for the region. Similarly, a new urea plant in Assam is expected to enhance domestic fertiliser production and reduce reliance on imports, aligning with India’s goal of self-sufficiency in fertilisers.
Further, a Comprehensive Programme for Vegetables & Fruits has been launched, focusing on post-harvest infrastructure, cold storage, and processing facilities. The National Mission on High Yielding Seeds aims to increase seed replacement rates and improve genetic yield potential, addressing productivity gaps in key crops. Recognising stagnation in cotton productivity, the Mission on Cotton Productivity has been introduced to promote high-density planting, improved agronomic practices, and better access to quality seeds.
These initiatives collectively address critical challenges such as low crop yields, inefficient supply chains, and soil nutrient deficiencies while leveraging global best practices and technological advancements.
Last, India’s broader goal is to elevate agricultural exports to $80 billion by 2030, while ensuring domestic food security and improving farmer livelihoods. To achieve this, the government is implementing measures to enhance competitiveness, reduce trade barriers, and promote agri-entrepreneurship. Strengthening logistics, quality control mechanisms, and global market linkages will play a crucial role in meeting this export target.
The Budget FY26 is a mature and visionary step towards transformative changes in agriculture. It strategically consolidates interventions around thematic priorities such as federal collaboration, institutional strengthening, and self-reliance in agriculture. The increased budgetary allocations reflect the government’s commitment to resolving systemic agricultural challenges, fostering economic resilience, and securing food security.
Overall, this Budget sets the right trajectory for sustainable agricultural development, ensuring that agriculture continues to serve as the primary engine of economic growth in India.
The author is principal scientist, ICAR-NIAP, Delhi. Views are personal
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