While India has made visible strides across manufacturing, services, and technology, agriculture continues to remain the backbone of the economy, both economically and socially. As of FY 2023–24, agriculture and allied sectors contribute around 17.8% of India’s GDP at current prices, supporting nearly half of the country’s workforce. Estimates and forecasting platforms suggest that for FY2024-25, the share of agriculture in GDP continues to be in the 17–18 % range. Beyond food security, the sector is now expanding into horticulture, fisheries, agri-processing, agri-tech, and dairy, gradually enabling farmers to move upstream across the value chain.
Farming techniques such as precision farming, regenerative and natural farming practices, crop diversification, and drone-based services are improving productivity and price realisation. However, these gains remain uneven, especially for small and marginal farmers, who constitute nearly 86% of India’s agricultural households. As the Union Budget 2026–27 approaches, the focus should therefore shift from incremental support to structural transformation, ensuring sustainable, resilience, inclusive growth.
From Fragmentation to Scale: Production Clusters
India’s agriculture continues to be constrained by fragmented landholdings and weak market linkages. A production cluster approach, supported through institutions like Farmer Producer Organisations (FPOs), offers a viable pathway to overcome these structural challenges.
Clusters enable aggregation of produce, collective input procurement, shared infrastructure, and stronger bargaining power in markets. Budget 2026 should deepen support for Farmer Producer Organisations (FPOs), not merely by increasing their numbers, but by strengthening their functionality so that they can serve as effective platforms for professional management, access to working capital, market intelligence, and post-harvest processing infrastructure. An additional opportunity lies in leveraging community institutions such as Self-Help Groups (SHGs) and Village Organisations (VOs) promoted under the National Rural Livelihoods Mission (NRLM), which can anchor FPOs at the grassroots and ensure wider farmer participation. Linking clusters to region-specific crops, allied livelihoods, and agro–climatic suitability can significantly improve income stability and scale efficiencies.
Water Access as the Foundation of Agricultural Resilience
Budget 2026 should prioritise targeted investments in water harvesting, groundwater recharge, micro-irrigation, and solar-powered irrigation systems, particularly in drought-prone and tribal regions. Strengthening community-led water governance and enabling affordable credit for water and sanitation infrastructure can directly enhance productivity, reduce risk, and stabilise farm incomes.
Leveraging Flagship Schemes for Integrated Impact
The PM Dhan Dhanya Krishi Yojana, covering 100 low productivity agricultural districts, presents an opportunity to operationalise convergence on the ground crop diversification, irrigation, storage, and institutional credit in a mission-mode approach. Budgetary support should ensure that such schemes prioritise smallholder farmers, rain-fed regions, and women-led collectives to maximise inclusive impact.
Expanding Credit and Financial Inclusion to Boost Rural Demand
Access to affordable and timely credit remains a cornerstone of agricultural growth. The agricultural credit target should be enhanced by 15–20%, with greater emphasis on allied activities such as fisheries, poultry, livestock, and dairy, sectors that offer stable income streams for smallholders.
Strengthening Kisan Credit Cards (KCCs), expanding interest subvention for smallholder and women farmers, and improving last-mile delivery of institutional credit can significantly reduce dependence on informal lenders.
Unlocking Value through Post-Harvest Infrastructure
Post-harvest losses estimated at 5–6%, especially in fruits, vegetables, and dairy continue to erode farmer incomes. Increased allocations for warehouses, cold chains, farm-gate storage, and processing units are critical to reducing distress sales and price volatility.
These factors collectively contribute to the vision of Vikshit Bharat 2047, with the agricultural sector playing a pivotal role in achieving it.
