Budget Boosts Agriculture but Structural Issues Persist

Source: The post Budget Boosts Agriculture but Structural Issues Persist has been created, based on the article “Ashok Gulati, Raya Das on Budget 2025: Stopping short of the farm” published in “Indian Express” on 3rd February 2025

UPSC Syllabus Topic: GS Paper3-Government Budgeting and Agriculture

Context: The article discusses the Union Budget 2025-26’s impact on agriculture. It highlights key initiatives like credit expansion, crop diversification, and climate-resilient seeds. However, it notes funding gaps, structural issues, and the need for market reforms to improve productivity and farmer incomes.

For detailed information on Union Budget 2025-2026 Highlights read this article here

What are the Key Agricultural Initiatives in the Union Budget 2025-26?

1. Focus on 100 districts to boost agricultural productivity, promote sustainable farming, and support crop diversification.
2. Kisan Credit Card limit increased from ₹3 lakh to ₹5 lakh, improving access to credit for farmers.
3. Pulses Mission launched to achieve self-sufficiency in tur, moong, and urad, reducing import dependence.
4. Makhana Board set up in Bihar to support farmers engaged in makhana cultivation.
5. Agriculture budget increased by 4% to ₹1.49 trillion, but inflation may reduce its real impact.
6. PM-Kisan allocation remains ₹60,000 crore, unchanged since 2019, reducing its real value.
7. 109 climate-resilient seed varieties released for 32 crops, but agri-R&D spending remains below 0.5% of agri-GDP.
8. ₹500 crore allocated for Fruits and Vegetables Mission, but higher investment is needed.
9. Agriculture Infrastructure Fund increased from ₹600 crore to ₹900 crore to improve storage and logistics.

What Structural Issues Remain Unaddressed?

1. Low Agricultural Budget Growth: The agriculture budget increased only by 4%, which may be ineffective if inflation remains 4-5%. PM-Kisan’s ₹60,000 crore allocation has not increased since 2019, reducing its real value.
2. Declining Farm Incomes: Agriculture’s share in GDP is 17.7%, but 46.1% of the workforce depends on it. Farm wages remain low as the workforce in agriculture has increased from 42.5% (2018-19) to 46.1% (FY24).
3. Weak R&D Investment: India spends less than 0.5% of agri-GDP on R&D, far below the 1% needed. Without proper research and extension, new climate-resilient seeds may not boost farm incomes.
4. Limited Crop Diversification: MSP-based policies still favor rice and wheat, limiting pulses, oilseeds, and horticulture growth.
5. High Post-Harvest Losses: India loses 8.1% of fruits and 7.3% of vegetables, costing ₹1.53 trillion annually. The ₹900 crore Agriculture Infrastructure Fund may help, but large gaps remain.
6. Import Dependence: India imports pulses, oilseeds, cotton, and maize, increasing vulnerability. Expanding pulses in rice-fallow areas and incentivizing private investment could help.
7. Market Inefficiencies: Farmers receive only 30% of consumer spending on fruits and vegetables due to weak supply chains. e-NAM integration with ONDC could help, but logistics remain a challenge.

Conclusion

The budget makes incremental changes but lacks a bold strategy. It still relies on subsidies instead of investment-driven growth. Private-sector participation, better market access, and technology adoption are necessary to make Indian agriculture more resilient and globally competitive.

Question for practice:

Discuss the key agricultural initiatives in the Union Budget 2025-26 and the structural issues that remain unaddressed.