New Delhi, 23 Jan 2025 (Reuters): India plans to increase spending for the agriculture sector by about 15% to around $20 billion in next month’s budget, two government sources said, marking the biggest increase in six years, as it tries to boost rural incomes and curb inflation.

The additional cash would be directed to developing high-yielding seed varieties, increasing storage and supply infrastructure, and boosting production of pulse crops, oilseeds, vegetables, and dairy products, the sources said.

The sources asked not to be named as they were not authorised to talk to the media.
India’s finance and agriculture ministries did not respond to emails seeking comments.

India, the world’s second-largest producer of rice, wheat, and sugar, has grappled with high food prices, which surged past 10% year-on-year in October 2024. They have since eased slightly and have averaged over 6% in the last decade.

To try to curb price rises, New Delhi has imposed export restrictions on some farm products, including wheat, and has extended duty free import policy for some pulse varieties.

Total allocations for agriculture and allied activities in the 2025/26 fiscal year starting April are likely to increase to about 1.75 trillion rupees ($20.2 billion), up from 1.52 trillion rupees in the current fiscal year, said the sources familiar with budget discussions.

This includes a rise in the agricultural ministry’s budget from 1.23 trillion rupees, and higher spending on research to develop new varieties, which currently stands at 99.41 billion rupees, one of the sources said.

The second source said agriculture was one of the priorities of the budget that Finance minister Nirmala Sitharaman will present on Feb. 1.

The same source said the government was seeking not just to increase domestic supplies but to generate a surplus sufficient to increase farm exports to $80 billion by 2030, up from the current $50 billion.

Agriculture employs nearly 45% of India’s workforce and contributes nearly 15% to the $3.5 trillion economy.

The budget is also expected to increase the limit for subsidised farm loans to 500,000 rupees from 300,000 rupees per farmer and expand crop insurance, the second source said.

The government plans to boost pulse production to 30 million metric tons by 2030, and invest $9 billion in the fisheries sector over the next five years, both sources said.

The plans also include providing incentives totalling 109 billion rupees for food processing firms through 2027.

The likely announcements would fall short of addressing deeper issues including low productivity and stagnant farm incomes, Devinder Sharma, an independent farm policy analyst, said.

“The government should increase direct transfers to farmers and improve procurement of crops to stablise incomes and ensure fair consumer prices,” he added.

“The government should increase direct transfers to farmers and improve procurement of crops to stablise incomes and ensure fair consumer prices,” he added.
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