Why India’s farmers may be left behind in the upcoming Union Budget

Gleaming airports and highways contrast with crumbling mandis, where farmers still lose their produce.

Even in normal times, preparing a meaningful Budget is not easy for a fast-developing economy that must balance economic growth with eliminating poverty. The current times are so unpredictable that this exercise would be much more demanding given the collapse of international law (epitomised by the United States’ abduction of Venezuela’s president), and uncertainty over global trade. Given this, agriculture may, well, take a backseat in Budget 2026-2027.

In this article, I highlight three issues of concern for the agriculture sector.

Push for a few APMCs of global standards

Even though horticulture produce has been de-notified, farmers continue to bring it to the Agriculture Produce Market Committee (APMC)-operated markets/mandis, as that is the place where buyers are available. If food losses are to be reduced, the APMCs need to have modern infrastructure.

In the last three years, the Union Budget provided an allocation of Rs 10-11 trillion for infrastructure. Massive investment was made in railways, ports, highways, aviation, energy, smart cities, etc. But there was no similar allocation for direct investment in agricultural infrastructure for marketing of farmers' produce, and secondary trade in the APMCs.

In 2020-2021, the Agriculture Infrastructure Fund (AIF) was launched to enable investment in the infrastructure through the creation of farm gate storage and logistics infrastructure. The idea was to enable farmers to store and preserve their farm produce properly, and sell it in the market at a better price with reduced post-harvest losses, and a smaller number of intermediaries.

Under the AIF, a provision for a Rs 1 trillion loan was made through lending by banks from 2020-2021 to 2032-2033. The Union government provides only an interest subvention of 3% on loans up to Rs 3 crore/30 million.

Currently, there’s not even one APMC which is of a global standard, while several highways and airports have been modernised to the highest standards. The facilities in even the APMCs of national importance are rather poor: Azadpur (Delhi) and Vashi (New Mumbai) are examples.

Direct investment support from the Union Budget should be provided to bring the infrastructure in at least these two APMCs to bring them to a global level. They can then become models for modernisation and the upgrade of other APMCs.

A report of the Expert Committee on Market Yard of National Importance was submitted in July 2023 to the government. It has made several recommendations to streamline marketing, which need to be discussed with the states to reach a consensus on the way forward.

Clear policy on future trading

Since August 2021, trading of futures in several agricultural commodities has remained suspended even as market prices of most commodities have remained below the MSP for quite some time. In the Union Budget, the government will do well to announce a clear policy on the issue. Due to frequent imposition of stock limits and suspension of futures, private traders have been reluctant to store commodities and even build new infrastructure.

If the government thinks that India’s surpluses of agriculture are marginal and future trading need not be allowed, it should be clearly articulated, and a time limit should be announced rather than a year-to-year extension of suspension.

It is important to note that research conducted by IIT Bombay, BIMTECH, and IRMA has not found a definite link between food inflation and SEBI’s suspension of future trading.

Review policies on cropping patterns

An ICMR-INDIAB survey in 28 states and Union Territories was published in 2023-2024 after screening 1.21 lakh people between 2008 to 2020.

It was found that an average Indian gets about 62-70% of daily calories from carbohydrates. In rural areas, this can be 80%. Not more than 45-55% of calories should ideally come from carbohydrates.

Protein intake is mostly less than recommended, with only about 9-12% calories coming from proteins, against the expert recommendation of 15%.

India’s cropping patterns show a marked preference for cereal crops, wheat, rice, maize, etc.

The area under corn has increased from 9.9 million hectares in 2020-2021 to 11.25 million ha in 2024-2025. On the other hand, the area under pulses has gone down from 28.83 million ha in 2020-2021 to 26.5 million ha in 2023-2024.

An important reason for this distortion is the support provided by the government through various policies like an attractive MSP, assured procurement, higher yield due to better seeds, etc. Several states (Chhattisgarh, Odisha, Telangana, Jharkhand, and Kerala) also provide additional support in the form of a bonus (or input support) for paddy. The result is that rice production has increased from 124 million tonnes in 2020-2021 to a record 150 million tonnes in 2024-2025.

The irony is that the government is giving rice procured at MSP for ethanol!

There is an urgent need to revisit agricultural policies to align them with the ecological and nutritional needs of India.

Siraj Hussain is former Agriculture Secretary to the Government of India.

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.