In her 2025-2026 budget, finance minister Nirmala Sitaraman said that agriculture is the first engine of growth. But for who? Who stands to benefit most from the current budget? Is it the farmers, corporations or someone else? Is the government really trying to build a self-sufficient agrarian India or is this just another promise?
The past decade, with Narendra Modi at the helm of affairs, has been a very difficult time for Indian agriculture, especially for farmers. They have been battling erratic weather, falling income, rising rural debt, deteriorating soil, price volatility and the the three central farm laws which were then rolled back. Rural consumption and expenditure have both fallen for the farmers. And the government’s limited data on rural income, especially from agriculture, points to a very different reality. Yet it seems nothing has been said to tackle these real-time challenges.
The farmers’ protest 2.0 still simmers at the Shambhu and Kinnuri borders and yet the budget speech finds no mention of a minimum support price.
Loans
The finance minister, in her speech, gave an outline for the Modi government’s agrarian vision for the coming year. The most important announcement was the increase of the loan limit for farmers under the modified interest subvention scheme from Rs 3 lakhs to Rs 5 lakhs.
The NABARD website tells you that this scheme has been active since the United Progressive Alliance government, and basically allows for debt relief for farmers by restructuring their interest rates with the bank. Under the scheme, farmers can obtain up to Rs 3 lakhs at the standard rate of 9%. However, the Union government offers a 2% interest subsidy on this rate, effectively lowering the rate of interest to 7%. Additionally, those who repay their loans on time receive an extra 3% concession, reducing the final interest rate to 4% per annum.
As per NABARD, the amount of subvention was to be calculated on the amount of crop loan from the date of disbursement up to the actual date of repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks, whichever is earlier, subject to a maximum period of one year.
We are still to understand finer details of the scheme. But one this is sure this scheme is more for the burden of rural credit on rural banks and lesser for farmers, as no concrete steps are announced to attack the source problems which are pushing farmers into debt, like rising prices of agri-chemicals, fertilisers and fuel. Erratic weather has played havoc with farmers incomes too.
Rural debt is also rising as various farmers from across the country are maxed out on their Kisan Credit Cards and have little chance of repaying them in the near future. Hence there are constant demands for debt waiver by various farmers’ groups.
Rural indebtedness has grown over the decade and no steps were taken to boldly address this issue.
Old scheme, new budget
The second ambitious project was the Prime Minister Dhan-Dhaanya Krishi Yojana aiming to target 100 districts with the lowest agricultural productivity, moderate crop intensity, and limited access to credit – the rain-fed and remote areas. We don’t know if it will suffer the same fate as the Farmers Producer Organisation programme or the programme for creating district-wise agri-clusters.
These schemes underline key themes like expansion of irrigation, sustainable agriculture, and access to long-term and short-term credit for farmers. But the budget 2025-26 could very well be rebuilding old and existing schemes under a new name. Expansion of irrigation was already the mandate of the Pradhan Mantri Krishi Sinchayee Yojana, sustainable agriculture was the mission of the Paramparagat Krishi Vikas Yojana and as for giving access to newer credit options from banks – that has also been the goal of the government. The penetration of formal financial institutions into the rural country has been a long time aspiration of banks and the government. Time will be the best judge of the claim that the scheme will reach 1.7 crore farmers.
The next big theme was “building rural prosperity and resilience,” which the government plans to achieve by “skilling, investments, and bringing newer global technologies” to Indian farms. The first phase will have 100 districts and it will be financed through multilateral banks. We have to slowly decode this statement, what does the finance minister really mean? As far as global technologies are concerned, are we thinking of getting more industrial agriculture or genetically modified crops to India? Also, how will we bring more investments? If the government plans to create more public-private “partnerships” between Big Ag corporations like Bayer or tech companies Amazon and Microsoft, one can be sure that the farmers won’t be the beneficiaries. The National Biodiversity Act has already been amended under Modi and now allows for foreign companies and interest groups to access our plant genetic resources and be treated as Indian companies especially in the seed sector.
Expecting more
Indians farmers should be very careful of these schemes as they may try and implement the spirit of the farm laws through another route. One of the key reasons for stating this is that the agriculture budget for 2025-26 is Rs 12,7290.16 lakh crore which is slightly lower than the revised estimates for 2024-25 which was Rs 13,1195.21 lakh crore. Even if we compare it to the budget estimate of 2024-25 which was Rs 12,2528.77 lakh crore, the increased budget for 2025-2026 is barely meeting the previous years’, after the inflation rate is considered. So this begs the question, are we doing well economically? With dollar at over Rs 86 and fuel at an all-time high, it would be hard to provide much-needed capital infusion in agriculture. The financial situation also bleeds the national mission on high yielding seeds because there no substantial increase for research and development within the public seed sector or the ICAR. So where will the seeds come from? Is it by partnering with private seed companies?
The finance minister also announced a scheme for vegetables, but perhaps India can expect more. In two previous budgets, Sitharaman had ambitiously said that they will battle the price fluctuations in vegetables with two programmes – TOP (tomato, onion and potatoes) and operation greens. Both seemed to have disappeared in thin air and India battled the worst vegetable price inflation in decades. Indian farmers needed a more concrete programme for improving vegetable production and supply chain logistics, and not generic statements.
The big silver lining in the budget is the six-year pulses programme under which the government will procure a maximum of three pulses from farmers over the next four years. This move could ensure that minimum support prices reach the farmers. It also stabilises the pulses market and strengthens India’s lentil production which was in decline. India’s pulses import also doubled to a record 66.33 lakh tonnes during 2024.
Another good step is the government’s decision to set up another gene bank for the conservation of plant germ plasm. Hopefully this is not being built in the public-private partnership mode and is strictly kept within the public sector with all ascensions or genetic material the sole property of Indians. Private foreign corporations shouldn’t be allowed to fund it or steal gene material from it.
But overall, this is a budget expressing the vision of a government which seems to have been affected sorely by privatisation. Agriculture is the engine of growth for our country, but the agri budgets of the Modi government over the last decade leads one to wonder for how long one begins to think for how long.
Indra Shekhar Singh is an independent agri-policy analyst and writer.
