Context

• The upcoming Union Budget 2025–26 offers a critical opportunity to reshape India’s agricultural landscape.
• Agriculture, the backbone of the Indian economy, requires strategic interventions to enhance productivity, improve farmer incomes, and address environmental concerns.
• Therefore, it is crucial to delve into key challenges and recommendations to make Indian agriculture more productive, competitive, and sustainable while safeguarding natural resources.

The Impact of Climate Change and Recommendations to Addressing the Climate Change and Resource Optimisation

• The Impact of Climate Change
  • India's agriculture sector faces an unprecedented challenge in the form of climate change, which threatens to destabilise the delicate balance of its agricultural production systems.
  • A 0.7°C rise in temperature since 1951 and a 6% reduction in monsoon precipitation have already demonstrated the tangible impacts of climate variability on crop yields.
  • With the risk of extreme weather events increasing, building climate-resilient agricultural systems is imperative for safeguarding the nation’s food security.
• Investment Boost in Agri R&D
  • One of the critical strategies to combat these challenges is a significant boost in agricultural research and development (agri-R&D).
  • Currently, India invests less than 0.5% of its agricultural GDP in R&D, a figure that pales in comparison to global benchmarks.
  • Doubling this investment to at least 1% of agricultural GDP can support the development of innovative, climate-resilient crop varieties and farming practices.
  • Research must focus on drought-tolerant and heat-resistant crops, improved irrigation technologies, and precision agriculture techniques that optimise resource use while minimising environmental degradation.
• Sustainable Farming Practices
  • Sustainable farming practices must be adopted to improve soil health and water retention
  • Soil organic carbon, a key indicator of soil fertility, has been depleting due to intensive farming practices and over-reliance on chemical inputs.
  • Strategies to restore soil health include the use of organic amendments such as compost and bio-fertilisers, along with crop rotation and cover cropping techniques.
  • Enhancing soil organic carbon not only boosts productivity but also increases the soil’s ability to sequester carbon, contributing to climate mitigation efforts.
• A Balanced Approach Towards Natural Farming and Fertilisers Use
  • The government’s Natural Farming Mission aims to promote low-input, sustainable agricultural practices.
  • However, its potential is limited in addressing the food demands of a rapidly growing population projected to reach 1.67 billion by 2050.
  • The challenge lies in striking a balance between ecological sustainability and meeting the nutritional needs of the population.
  • This necessitates the use of both bio-fertilisers and chemical fertilisers in an optimal mix, ensuring that soils receive an appropriate balance of macronutrients (nitrogen, phosphorus, and potassium) and micronutrients (zinc, boron, and iron).
• Technological Innovations
  • Technological innovations such as nano-urea, nano-DAP (di-ammonium phosphate), and advanced phosphates like single or triple superphosphate have immense potential to enhance nutrient use efficiency.
  • However, their adoption remains limited due to the skewed subsidy structure favouring conventional granular urea.
  • By promoting these technologies through incentives and awareness campaigns, the government can encourage their widespread use, ensuring better nutrient management and reducing environmental impacts.

Some Other Key Proposals to Make Agriculture More Productive and Competitive for Farmers

• Modernising Fertiliser Subsidies and Policies
  • A transformative approach involves replacing the existing fertiliser subsidy structure with direct income transfers to farmers based on landholding size.
  • This shift will free fertiliser prices from regulatory controls, encouraging balanced nutrient application and reducing environmental harm.
  • Such a policy will plug leakages, enhance resource efficiency, and align with farmers’ economic interests, provided it is communicated effectively to build trust.
• Building Agri-Value Chains
  • Agriculture must evolve into a comprehensive food system encompassing production, marketing, and consumption, ensuring both food security and farmers’ income growth.
  • Drawing inspiration from India’s dairy sector success, where farmers retain 75-80% of consumer expenditure, similar value chain systems for fruits and vegetables can revolutionise the sector.
  • Currently, farmers receive only about one-third of consumer spending in these commodities.
  • Milk, India’s largest agricultural commodity, exemplifies the potential for transformative change.
  • With 239 million tonnes of production, India leads the world in dairy output.
  • This success, driven by cooperatives and private sector dairies, can be replicated for perishable produce like fruits and vegetables through a dedicated board akin to the National Dairy Development Board (NDDB).
  • Such an initiative, led by visionary leadership, could mitigate inflation and stabilize markets.
• Reforming Export and Market Policies
  • India’s current agricultural policies, marked by export bans on key commodities like onions, wheat, and rice, are counterproductive.
  • These measures depress domestic prices, inflicting implicit taxes on farmers while reflecting a pro-consumer bias.
  • For instance, the Food Corporation of India (FCI) dumps rice and wheat in the domestic market at prices significantly below economic costs, undermining farmer profitability.
  • Comparative data from the Organisation for Economic Co-operation and Development (OECD) highlights India’s negative producer support estimate (PSE) of -15.5%, contrasting starkly with China’s PSE of 14% and the OECD average of 13.8%.
  • This disparity underscores the urgent need for market reforms to enhance price support and create a fair playing field for Indian farmers.

The Path Forward: Prioritizing Agriculture in Budget 2025–26

• Increased investment in climate-resilient R&D, reforming fertiliser subsidies, strengthening value chains, and adopting market-aligned policies are pivotal steps.
• These measures will not only enhance productivity and farmer incomes but also address environmental challenges and food security concerns.
• A balanced, farmer-friendly approach is essential to transform Indian agriculture into a globally competitive and sustainable sector.

Conclusion

• The Union Budget 2025-26 must prioritise agriculture by addressing climate challenges, rationalising subsidies, and fostering robust value chains.
• By transitioning to a sustainable and market-oriented agricultural model, India can secure the livelihoods of its farmers, meet the nutritional demands of its population, and protect its natural resources.
• Effective implementation of these measures will pave the way for a resilient and equitable agricultural sector, fulfilling its critical role in the nation’s economy and food security.