Budget 2026-27: Allied Farm Sectors See Funding Boost but Core Issues Remain Unaddressed
Finance Minister Nirmala Sitharaman's Union Budget for 2026-27 has directed resources toward allied agricultural sectors like high-value crops, livestock, and fisheries, aiming to promote crop diversification and enhance farm incomes. However, these allocations have been criticized as insufficient, with little relief for farmers grappling with plummeting crop prices and incomes. Compounding the challenges, the budget has reduced funding for agricultural research at a time when climate risks and productivity crises loom large.
New Schemes for Plantation Crops and AI-Driven Advisories
In her budget speech, Sitharaman announced a new ₹350-crore scheme to boost high-value plantation crops, including coconut, cocoa, cashew, and tree nuts. She emphasized that this initiative would diversify farm outputs, increase productivity, and create employment opportunities, particularly in coastal regions. The minister stated that a dedicated scheme for cashew and cocoa would help India achieve self-reliance, improve export competitiveness, and transform these products into premium global brands by 2030.
Additionally, the budget proposed the Bharat Vistaar scheme with a ₹150 crore outlay, which will utilize a multilingual artificial intelligence (AI) tool for crop advisories. This tool will integrate AgriStack portals—which store farm-level data on land holdings and crops—with agricultural practices developed by the Indian Council of Agricultural Research (ICAR). The goal is to enhance farm productivity and mitigate risks by providing personalized advice to farmers.
Infrastructure and Employment Initiatives
The budget also includes plans to develop 500 reservoirs as Amrit Sarovars and strengthen the fisheries value chain in coastal areas. Sitharaman promised job creation in rural and peri-urban areas through a credit-linked subsidy scheme, modernization of livestock enterprises, and the formation of farmer-producer organizations. These measures signal a recognition of allied farm occupations and their growing contribution to agricultural GDP.
Shortfalls in Critical Areas
Despite these announcements, the budget falls short in addressing pressing issues. Food prices have been declining for months, with most crops like cereals, pulses, and oilseeds selling below government-mandated minimum support prices in wholesale markets. The Economic Survey noted that while agricultural activity in April-September 2026 benefited from a favorable monsoon, growth is expected to remain below the long-term average of 4.5%.
A review of budget documents reveals that key schemes for price support, insurance, and interest subsidies on crop loans received minimal increases or remained stagnant. For instance, the price-support scheme was allocated ₹7,200 crore for 2026-27, only slightly higher than the ₹6,941 crore in 2025-26. Funds for crop insurance and interest subsidies on short-term crop loans were unchanged at ₹12,200 crore and ₹22,600 crore, respectively.
Research Funding Cut Amid Climate Challenges
Alarmingly, the budget for agricultural research was reduced from ₹10,466 crore in 2025-26 to ₹9,967 crore in 2026-27, even as Indian agriculture faces a productivity crisis and escalating climate risks. Overall, agriculture and allied sectors received ₹1.63 trillion, a marginal rise from ₹1.59 trillion in FY26.
Avinash Kishore, senior research fellow at the International Food Policy Research Institute's Delhi office, commented that while the budget proposes initiatives for subsectors like plantation crops and fisheries, it disappoints by cutting research funding, which is crucial for improving productivity and efficiency. He highlighted that the center spends more on fertilizer subsidies alone (₹1.9 trillion in 2025-26) than the entire agriculture budget, with cereals like rice, wheat, and maize consuming most of these subsidies.
Unaddressed Recommendations and Operational Delays
The Economic Survey had recommended repurposing fertilizer subsidies and warned against the increasing cultivation of crops like maize for biofuel production, which could displace oilseeds and pulses—areas where India's import dependence is growing. Kishore suggested that fertilizer subsidies and direct cash transfers to farmers (₹63,500 crore annually) could be better utilized for productivity enhancement and research.
Furthermore, budget documents show that several missions on cotton, pulses, perishables, and seeds, announced in the previous budget, remain non-operational and received zero allocations for FY27. This underscores a gap between policy announcements and implementation, leaving farmers with limited tangible support in the face of economic and environmental challenges.
