From Soil to Sustainability: Budget expectations for India’s agriculture sector – Economy News

By Amit Vatsyayan, Leader GPS-Agriculture, Livelihood, Social and Skills, EY India

The Indian agriculture sector stands at the cusp of a significant transformation, with the upcoming budget poised to address its evolving needs. As the Union Budget 2025 approaches, all eyes are on the government’s plans for the agricultural sector—a lifeline for millions and a pillar of India’s economy. With agriculture contributing significantly to GDP and employing nearly half the workforce, the stakes could not be higher. Will this budget deliver the much-needed push toward sustainable growth, technological integration, and enhanced farmer welfare? Here’s what we can anticipate.

Over the past decade, the government has consistently increased allocations to the agricultural sector, reflecting its importance in India’s socio-economic fabric. A closer look at the budgets from 2014 onward highlights the government’s evolving priorities.

India’s agricultural policy over the years has shown a clear focus on growth and farmer welfare. Previous budget trends highlight efforts to address key challenges and promote development in the sector. During 2014–2016, the emphasis was on strengthening rural infrastructure and meeting the basic needs of the farming community.

From 2017 to 2019, the approach shifted toward improving farmers’ incomes, with initiatives like PM-Kisan, which provides direct income support to small and marginal farmers. Reforms in Minimum Support Price (MSP) policies were also introduced, ensuring farmers received at least 1.5 times the cost of production for major crops. These measures reflect a gradual yet consistent focus on strengthening the agricultural sector and improving livelihoods.

The chapter of 2020- 2022 unfolded with a spotlight on agri-infrastructure and digitization reflecting a modern turn in the agricultural saga, signalling a significant commitment to nurturing long-term sectoral growth and embracing the digital age.¹ In the most recent budgets, the government’s narrative pivoted towards sustainability and climate resilience acknowledging the emerging global environmental challenges.

As we approach the unveiling of the Union Budget 2025-26, a confluence of strategic initiatives and financial commitments is anticipated to reshape India’s agricultural landscape.

Moving forward, the government should continue its efforts towards making agriculture, more sustainable, increasing farmer’s income, and re-aligning policies towards export-oriented agriculture, value chain development, crop diversification, climate-change adaption, research and digital governance. Embracing an approach, which is inclusive, innovative and climate sensitive is essential, providing farmers with a diversified portfolio, comprising agriculture, horticulture, animal husbandry and fisheries. Further strengthening the collective bargaining through FPOs/ FPCs, SHGs and cooperatives.

Every rupee spent on agricultural R&D yields a return of ₹11.2, far exceeding the returns from subsidies on fertilizers (0.88), power (0.79), education (0.97), or roads (1.10). Therefore, focusing on R&D and digitalization could significantly enhance productivity, sustainability, and profitability in the

agricultural sector. Moreover, promoting allied sectors such as fishing and livestock farming can enhance farmers’ incomes, contribute to agricultural GVA, and reduce environmental stress through sustainable practices. These efforts are essential for a Viksit Bharat by 2047!

The Union Budget 2025-26 is expected to prioritize a transformative approach to agriculture, emphasizing productivity, sustainability, and inclusivity. Key anticipated focal areas include:

Increased budget for productivity enhancement: Programs targeting yield improvement for pulses, oilseeds, and millets will likely include specialized machinery, advanced agricultural practices, and support for crop-specific Farmer Producer Organizations (FPOs). Model farmers will be instrumental in disseminating knowledge, promoting diverse cropping patterns, and enhancing food security.

Comprehensive support for seed ecosystem: Strengthening the seed value chain through institutions like ICAR is expected. Initiatives may include a demand aggregation framework, better seed distribution mechanisms, and promoting high-quality, climate-resilient seeds to boost adoption and yields.

Increased investment in agricultural R&D: Public-private partnerships for research in seeds, climate-resilient crops, and planting materials may receive a funding boost. Policies aimed at improving the Seed Replacement Rate (SRR) and Varietal Replacement Rate (VRR) will likely enhance agricultural productivity.

Post-Harvest infrastructure development: The government may introduce incentives similar to the Production Linked Incentive (PLI) scheme to promote investments in storage, cold chains, and logistics. Reducing post-harvest losses and improving market access for farmers will be key priorities.

Digital agriculture and technology integration: Advanced technologies like AI, IoT, and blockchain could see increased promotion. Precision farming, controlled-environment agriculture (e.g., hydroponics and vertical farming), and enhanced data systems are anticipated to optimize agricultural efficiency and sustainability.

Export-Oriented agriculture and value chain development: Policies supporting high-value agriculture and allied sectors like horticulture and fisheries are likely. Enhancements in processing infrastructure, digital supply chains, and export facilitation through clusters and improved logistics will be vital.

Strengthening allied sectors for sustainable growth: Focused support for dairy, poultry, and aquaculture, including climate-resilient aquaculture schemes, will likely drive diversification and rural income growth. Expanded Krishi Vigyan Kendras (KVKs) and access to credit through Kisan Credit Cards will provide further support.

Focus on climate resilience: Investments in green energy, micro-irrigation networks, crop insurance expansion, agroforestry, and soil health initiatives are anticipated to mitigate climate change impacts and ensure long-term agricultural sustainability.

Empowering marginalized farmers: Programs encouraging diversification into allied sectors and strengthening FPOs through credit access, capacity-building, and market linkages will aim to improve income security for small and marginal farmers.

Incentives for agri-tech startups: Funding, incubation, and tax incentives for startups in farm mechanization, logistics, and digital solutions are expected. Innovation hubs will foster emerging technologies like AI and robotics, attracting young talent to agriculture.

During 2025, India’s agricultural sector is poised for a transformative phase, driven by technological advancements and changing market dynamics. The upcoming budget will play a crucial role in steering this transformation. Focused investments in technology, sustainability, and infrastructure, coupled with forward-looking policies, can unlock the sector’s potential. Stakeholders across the board are hopeful for a budget that not only addresses immediate concerns but also lays the groundwork for a resilient and prosperous future.

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