Indian agriculture, being heavily dependent on monsoons with about 60% of cultivated land under rain-fed conditions, is extremely vulnerable to climate change and the risks arising from it. According to the Union agricultural ministry, a total of 310 districts are identified as the most vulnerable in the country. Within these 310 districts, 109 districts are categorised as ‘very highly’ vulnerable and 201 districts as ‘highly’ vulnerable as per the National Innovations on Climate Resilient Agriculture (NICRA).
Additionally, about 80% of Indian farmers are small landholders, whose livelihoods are inherently susceptible to the risks resulting from climate change and weather fluctuations. About 95% of these smallholder farmers in India are affected by at least one of the climate change hazards, as per a report of McKinsey & Company in 2023.
On the demand side, the country’s population is growing steadily, having surpassed China, and raising the domestic food production requirements towards self-sufficiency. Consequently, Indian agriculture is now faced with a challenge of ensuring food security of over 17% of the world’s population with dwindling natural resources like groundwater, soil fertility etc, while withstanding climate change.
Under such a scenario, it is essential to prioritise and scale-up measures to ensure climate change adaptation of Indian agriculture. Such measures need to cover various crucial aspects, starting from accurate weather forecasting systems to development of climate change-resilient high-yielding crop varieties and cultivation practices, and strengthening the agricultural extension system for effective outreach to farmers. In order to achieve this, there is a substantial requirement of funds that need to be mobilised on an urgent basis.
However, there are no precise estimates of the requirement and actual flow of finances for climate change adaptation in agriculture. A preliminary estimate indicated that India would need around$206 billion (at 2014-15 prices), between 2015 and 2030, for implementing adaptation actions in agriculture, forestry, fisheries, infrastructure, water resources and ecosystems according to India’s long-term low-carbon development strategy.
As a step in this direction, the National Adaptation Fund for Climate Change (NAFCC) was set up in 2015 to support adaptation activities in the country with Rs 350 crore earmarked for the year 2015-16 and 2016-17. So far, about Rs 847 crore has been released for various projects according to the fund’s implementing agency, National Bank for Agriculture and Rural Development (NABARD). The funding is largely project-based. However, the budgetary allocation for NAFCC, under the Union environment ministry, has declined drastically in the subsequent years to Rs 34 crore in 2022-23 and nil in 2023-24.
Prior to this, a project framework named NICRA was launched in 2011 and funded under the Department of Agricultural Research and Education (DARE). The project was aimed at strategic research on adaptation and mitigation of climatic change impacts on agriculture and to help farmers and other stakeholders through transfer of technologies and creating awareness. However, budgetary allocation of funds for this project also declined to Rs 40 crore in 2022-23 and became nil thereafter.
Although there seems to be an increased involvement of the private sector in Indian agriculture in recent years, it has been largely confined to agri-tech start-ups providing mainly e-commerce platforms for inputs and out marketing and for advisory services. Nearly 80% of private sector investments in agriculture were allocated to start-ups with platforms providing input and output linkages, whereas less than 20% of investments were allocated to research and development and novel farming solutions, as per a report of McKinsey & Company in 2023. The significantly low flow of private sector investments in agricultural research and development clearly indicates a lack of interest from the private sector, likely due to the limited potential for revenue generation from the predominant smallholder farmers.
In such a scenario, it is essential to scale-up public sector investments in agriculture, particularly for promoting research and development, in order to equip Indian agriculture for climate change adaptation for enhancing crop production and input use efficiency. In this regard, the latest Budget 2024-25 acknowledges and emphasises ‘the productivity and resilience of agriculture’ as the first of the nine priorities areas of the government. While it appears to be the first step in the right direction, there is a need to scale-up funding and efforts substantially.
The allocation of funds for agricultural research and development through DARE has witnessed only a fractional increase of 0.65% to Rs 9,941 crore for 2024-25 from Rs 9,876 crore in the previous year. This amounts to only about 0.2% of agricultural gross domestic product (GDP) at about Rs.47 lakh crore at current prices in 2023-24. This is substantially low compared to other major emerging economies like China and Brazil at 0.6% and 1.6% respectively.
The development and field testing of new crop varieties and cultivation practices aimed at enhancing productivity and climate resilience require extended periods of time. Hence, in order to be successful, such agricultural research and development measures must be strategically planned and supported by adequate funding consistently for the required duration. There is an urgent need to raise agricultural research funding to an extent of about 0.5% – 1% of agricultural GDP in order to enhance productivity and climate change resilience in Indian agriculture, thereby ensuring food security for the growing population.
Dr. A. Amarender Reddy has a PhD (economics), FISPRD and is Principal Scientist (Agricultural Economics), ICAR-Central Research Institute for Dryland Agriculture, Hyderabad.
Dr. Tulsi Lingareddy is an economist studying financial markets, sustainable finance and climate change. Views are personal.
