Union Budget 2025-26 in Agriculture

The upcoming Union Budget for 2025-26 presents an opportunity to address critical challenges in the agricultural sector, particularly in light of climate change and the need for sustainable practices.

Table of Contents

Challenges in Indian Agriculture

Impact of Climate Change: Temperatures in India have risen by 0.7°C since 1951.
- July-September precipitation has declined by 6%, increasing risks to agricultural productivity.
Soil Health Issues: Low organic carbon content and inadequate moisture retention in soils.
- Current farming practices and imbalanced fertiliser usage exacerbate the problem.
Skewed Fertiliser Subsidy Policy: Urea is heavily subsidised compared to other nutrients like phosphate (P) and potash (K), leading to overuse of nitrogen (N).
- Micronutrients like iron, zinc, and boron are underutilized.
Pro-Consumer Bias in Food Policy: Frequent export bans (on onions, wheat, sugar, and rice) and below-cost domestic market dumping by FCI harm farmers.
- Economic cost of rice to FCI: ₹39/kg; sold in the open market at ₹29/kg.
Negative Producer Support Estimate (PSE): India’s PSE is -15.5%, indicating an “implicit tax” on farmers, compared to 14% support in China and OECD countries.

Key Suggestions for Agriculture Budget 2025-26

Increase Agri-R&D Spending:
- Current allocation: <0.5% of agri-GDP.
- Proposed: Double to at least 1% of agri-GDP.
Promote Soil Health:
- Support practices that enhance organic carbon and moisture retention.
- Emphasize balanced fertilisation (macronutrients and micronutrients).
Introduce a Direct Income Transfer Scheme:
- Based on per-hectare basis, using existing data (fertiliser sales, soil health cards, PM-KISAN).
- Free fertiliser prices from controls to restore balance in N, P, K usage.
- Promote technological innovations like nano-urea and nano-DAP.
- Benefits:
  - Improve nutrient use efficiency.
  - Reduce environmental damage and plug leakages in subsidies.
  - Restore farmer trust through effective communication.
Learn from Milk Revolution:
- Milk: India’s largest agri-commodity with 239 million tonnes production, surpassing the US (103 million tonnes).
- Farmers receive 75-80% of consumer price in the milk value chain.
Revolutionise Fruits and Vegetables:
- Currently, farmers receive only ~33% of consumer price.
- Establish a dedicated board like NDDB (National Dairy Development Board) for fruits and vegetables.
- Appoint a visionary leader akin to Verghese Kurien to drive reforms.
End Anti-Market Practices:
- Stop export controls, private stock limits, and futures bans.
- Ensure market-driven pricing without excessive government intervention.
Encourage Long-Term Market Reforms:
- Move from pro-consumer bias to balanced farmer-consumer policy.
- Facilitate open markets to enhance farmer incomes and stabilize supply.
Promote Sustainable Agriculture:
- Strengthen initiatives like the Natural Farming Mission.
- Recognize that natural farming alone cannot feed a growing population (1.67 billion by 2050).
- Combine biofertilisers with appropriate chemical fertilisers for sustainable productivity.