As Budget 2025 prioritised agriculture as the first engine of growth, the expectation clearly was that outlays would boost productivity and resilience in this sector that contributes 18% of the country’s gross value added (GVA) and supports less than half of the population. The nation’s food security depends on this sector which also supports overall economic growth. Since the ruling National Democratic Alliance regime first came to power in 2014, agricultural growth has averaged 3.7% per annum while growth in overall GVA was 5.8%.
This far-from-buoyant growth performance has been strongly influenced by the southwest monsoon, which has become highly wayward due to climate change. If growth is raised to 5% and the sector’s share is 20% of overall GVA, agriculture will contribute 1% growth to GVA, according to the latest Economic Survey. The policy imperative must accordingly be to prioritise investments in infrastructure like irrigation and water management facilities, and develop heat-resistant crops by investing more in research and development (R&D) for a more climate-resilient agriculture.
For such reasons, it is far from obvious why Budget 2025’s outlays for the ministry of agriculture and farmers’ welfare at Rs 1.38 trillion or 2.7% of total expenditures represent a shrinking share from 5% in Budget 2019. The budgeted outlays are lower by 2.5% when compared to the revised estimates of Rs 1.41 lakh crore for the current fiscal. The ministry has two departments — agriculture and farmers’ welfare, and agricultural research and education (DARE). The allocation for the department of agriculture and farmers’ welfare at Rs 1.27 lakh crore is lower by 3% from the revised estimates this fiscal.
There are no allocations for the Prime Minister Dhan Dhanya Krishi Yojana covering 100 districts with low productivity, moderate crop intensity and below average credit parameters helping 17 million farmers. But there are modest provisions for budgetary schemes announced for self-sufficiency in pulses, fruits and vegetables, missions on hybrid seeds and cotton technology, and the makhana board in Bihar. DARE’s outlays at Rs 10,466 crore are only 3% higher than the revised estimates this fiscal, representing a decline in real terms.
Every rupee spent on agri-R&D yields better returns than a rupee spent on subsidies and contributes to sustainable agriculture. Agricultural economists like Ashok Gulati have forcefully underscored the need to double the budgeted spend on DARE.
Given the impact of weather on agricultural output, the Economic Survey stressed that research into climate-resistant seeds is a priority, adding that 2,177 of the 2,593 new varieties released since 2014 specifically address this challenge; and that in regions such as northwestern India heat-tolerant varieties have seen widespread adoption. Above all, policy must ensure that agriculture does not remain hostage to the monsoon’s vagaries by building more irrigation facilities, especially for small and marginal farmers in peninsular India.
This is perhaps less of a concern in the vanguard agrarian states of Punjab, Haryana, and western Uttar Pradesh which have access to canal irrigation. In fact, the share of irrigation in paddy-growing states like Punjab is as high as 99.7% but as low as 31.5% in Odisha. Jharkhand and Assam also lag significantly. However, considering the shrinking share in budgetary expenditures and lower real R&D expenditures, there are no prizes for guessing why those who live off the land will be disappointed with the incremental approach to deal with a priority growth engine in Budget 2025.