India plans to increase spending on agriculture by more than 15%

India, seeking to increase rural incomes and curb inflation, is going to increase spending on the agricultural sector by about 15% and bring the total budget allocation to $20 billion, which will be a record figure for the last six years, Reuters reports, citing anonymous sources in the country’s government. The additional funds, according to the sources, will be used to create high-yielding varieties of grain crops, build storage facilities for agricultural products and develop the relevant transport and logistics infrastructure, as well as expand production of pulses, oilseeds, vegetables and dairy products.

The agency’s interlocutors asked not to be identified as they were not authorized to speak to the press. Emails have been sent to the Indian Ministry of Finance and Ministry of Agriculture requesting comment on the situation, but no response has been received so far. India is the world’s second largest producer of rice, wheat and sugar. However, food prices in the country are quite high – in October 2024, inflation exceeded 10% year-on-year. Although prices declined slightly by the end of the year, the average price increase over the past decade was over 6%. To curb this negative phenomenon, the government restricted exports of some agricultural commodities, including wheat, and extended duty-free import permits.

According to sources, the total budgetary expenditure on agriculture and allied activities in MY 2025/26, which begins in April, is expected to increase to 1.75 trillion rupees ($20.2 billion), up from 1.52 trillion rupees ($17.6 billion) in the current fiscal year. This figure includes an increase in the budget of the Ministry of Agriculture from the current 1.23 trillion rupees ($14.2 billion), as well as an increase in funding for breeding work on new varieties (currently the amount of expenditures under this item is 99.41 billion rupees). $1.1 billion), said one of the interlocutors of the publication. The second informant said that agriculture is one of the priority areas in the draft budget, which will be presented by Indian Finance Minister Nirmala Sitharaman on February 1. The government is not only seeking to increase domestic agricultural production, but intends to achieve a surplus that will allow it to increase agricultural exports from the current $50 billion to $80 billion by 2030. Agriculture employs about 45% of India’s working population, and the industry’s contribution to the country’s economy is about 15% (by the end of 2023, India’s GDP exceeded $3.5 trillion).

In addition, it is expected that the limits on subsidized loans for farmers will be increased from 300 thousand rupees ($3.5 thousand) to 500 thousand rupees ($5.8 thousand) per recipient, and crop insurance programs will be expanded, the second source added. Both sources confirmed that the government plans to increase pulses production to 30 million tons by 2030 and invest $9 billion in the fishing industry over the next five years. The plans also envisage providing incentives to food processing companies totaling 109 billion rupees ($1.25 billion) by 2027. However, according to Devinder Sharma, an independent agricultural policy analyst, all these measures will not help solve the more serious problems facing the industry, such as low labor productivity and stagnant farmers’ incomes. “The government needs to increase direct transfers to farmers and increase agricultural procurement to stabilize their incomes and ensure fair consumer prices,” Sharma said.

Tags: subsidies, India