Financial year 2025-26 is a crucial year for Indian agriculture. The IMD has warned that 2025 could be the hottest year of the century, with early reports of yield losses in wheat and apples due to rising temperatures. This year also marks a key milestone in India’s energy security efforts, with the push for E20 fuel blending, which relies on rice, maize, and sugarcane as feedstocks.
Meanwhile, record imports of yellow peas, maize, sunflower oil, and soybean oil highlight shifts in India’s agri-trade landscape. With these challenges and transitions ahead, the Budget’s direction will play a pivotal role in shaping the sector’s resilience and strategy for the coming year.
We begin with a summary of the budget for the Department of Agriculture and Farmers’ Welfare (DOA) under the Ministry of Agriculture and Farmers’ Welfare.
The Budget for the DOA for FY2025 is set at Rs 1.27 lakh crore, about 2.5 per cent of the total national budget. Half of this budget funds the PM-Kisan scheme, which offers direct cash transfers to land-owning farmers. Approximately one-third of the remaining budget goes toward the interest subvention scheme, providing concessional short-term credit for farmers. The next major allocation is for PM Fasal Bima Yojana (crop insurance). New initiatives include the Cotton Technology Mission (Rs 500 crore), Mission for Pulses (Rs 1,000 crore), National Mission for Hybrid Seeds (Rs 100 crore), Mission for Fruits & Vegetables (Rs 500 crore), and support for Bihar’s Makhana Board (Rs 100 crore).
Here are some key points to note from this year’s Budget.
There’s a mismatch between narratives and allocations. Centrality of the agriculture sector was highlighted both by the Chief Economic Adviser, who called it the sector of the future, and by the FM today, who centred her entire Budget speech on poor, youth, farmers and women. It is ironic then that the Ministry of Agriculture’s budget reduced for the upcoming year. DOA’s budget has been reduced by about Rs 3,900 crore from last year despite increasing agricultural distress due to climate change. As per revised estimates, DOA’s 2024-25 expenditure was Rs 1.31 lakh crore. It has been reduced by about 3 per cent.
Allocation under crop insurance has been reduced. In a year where the first month highlighted climatic stress on crops, it is rather surprising to witness a reduced annual allocation under Pradhan Mantri Fasal Bima Yojana (PMFBY). In her budget documents, FM has reduced allocation under this scheme to about Rs 12,242 crore, which is even lower than the levels of 2023-24. The actual spend under the scheme last year was Rs 15,864 crore.
Expanded scope is not matched by increased allocation. This is the case of the Modified Interest Subvention Scheme (MISS), which offers concessional short-term agri-loans to farmers engaged in crop husbandry and allied activities like animal husbandry, dairying, and fisheries. Under this scheme, farmers can avail short-term crop loans up to Rs. 3 lakh at an interest rate of 7 per cent per annum, with an additional 3 per cent subvention for timely repayment, effectively reducing the rate to 4 per cent. The Finance Minister increased the Kisan Credit Card (KCC) loan limit from Rs 3 lakh to Rs 5 lakh. However, despite this expansion, the scheme’s budget allocation remains unchanged at Rs 22,600 crore, signalling the government’s expectation of lower credit uptake.
Seeds, nutrition and cotton
The Budget has rightly focused on inputs, particularly on seeds, irrigation and storage.
The National Mission on High-Yielding Seeds focuses on developing high-yielding, pest-resistant, and climate-resilient seed varieties with over 100 varieties to be commercially available. The Prime Minister Dhan-Dhaanya Krishi Yojana (DDKY) targets improving irrigation facilities in low-productivity districts to enhance water usage efficiency. Robust allocations under Agriculture Infrastructure Fund (AIF) and DDKY re-emphasise GOI’s commitment to work along a crop’s value chain. These two specific programs aim at improving post-harvest storage at the panchayat and block levels.
There is a significant focus on developing rural infrastructure, such as warehousing facilities for air cargo to handle perishable goods like fruits, vegetables, and other crops. This will ensure better market linkages and reduce logistical challenges, improving the flow of agricultural produce through the value chain.
The National Institute of Food Technology, Entrepreneurship, and Management will be set up in Bihar to boost food processing and add value to farmers’ produce.
There’s also a reiteration of focus on nutrition, particularly pulses. With a budget of Rs 1000 crore for FY2025, FM announced a six-year Mission for Aatmanirbharta in Pulses with an aim to increase domestic production of pulses, reduce imports, and support climate-resilient seeds, better productivity, and post-harvest management. NAFED and NCCF will procure pulses from registered farmers.
The Budget has focussed on cotton, honey, makhana, fruits and vegetables. After discontinuing Operation Greens (2018-2022) focused on TOP crops, the government has launched a new scheme covering more crops with the same Rs 500 crore budget. It aims to promote production, efficient supply, processing, and remunerative prices for vegetables and fruits, with a focus on domestic and international markets.
Mission for Cotton Technology is a five-year mission to improve cotton productivity through better farming practices, sustainable techniques, and extra-long staple cotton varieties. It offers scientific support for pest control and farm management, aligning with the government’s 5F vision to enhance farm practices, fibre quality, fabric manufacturing, fashion, and foreign exports.
There’s a focus on 100 districts via two new programmes. PM Dhan-Dhaanya Krishi Yojana aims to improve productivity in 100 low-performing districts through crop diversification, sustainable farming, irrigation, and credit access, benefiting 1.7 crore farmers. The Rural Prosperity and Resilience Programme focuses on reducing agricultural under-employment via skilling, investment, and technology, targeting rural women, youth, and marginal farmers to reduce migration. The overlap between the two programmes and the total number of districts covered is unspecified.
India’s agriculture and energy sectors are increasingly intertwined, yet the Budget fails to acknowledge this critical link. The National Policy on Biofuels (2018, amended 2022) mandates E20 fuel blending by ESY 2024-25, requiring an estimated 4 MMT of sucrose, 2.4 MMT of rice, and 12.8 MMT of maize—a sharp rise from ESY 2023-24. This shift demands about 7.1 million hectares of farmland, underscoring the deepening impact of energy mandates on agriculture. Despite the push for a circular economy, where agri-waste fuels green energy, the Budget overlooks these structural shifts and their implications.
More, when we review the fine print.
Saini and Sharma are CEO and Analyst at Arcus Policy Research, New Delhi. Views are personal.