Highlights Between 2011-12 and 2024-25, agriculture growth has been slower than overall GDP growth.  It has been driven largely by allied activities rather than crops. Despite employing nearly half the workforce, agriculture contributes less than 20% of the value added to the economy, reflecting low productivity. Lower agricultural productivity is driven by fragmented landholdings, limited mechanisation, inadequate access to quality inputs, and continued dependence on rain-fed agriculture. Gaps in post-harvest infrastructure, market access, and crop insurance implementation constrain income realisation for farmers.

The Ministry of Agriculture and Farmers Welfare has two departments: (i) Agriculture and Farmers Welfare and (ii) Agricultural Research and Education.  The Department of Agriculture and Farmers Welfare implements policies and programmes related to farmer welfare and manages agricultural inputs.  The other department coordinates and promotes agricultural research and education.  This note examines the proposed budget allocations of the Ministry of Agriculture and Farmers Welfare for 2026-27 and discusses key issues in the sector.

Overview of Finances

Allocation in 2026-27

In 2026-27, the Ministry has been allocated Rs 1,40,529 crore, higher than the revised estimate of 2025-26 by 5.4%.  The Ministry has allocated 93% of its budget to the Department of Agriculture and Farmers Welfare and 7% to Department of Agricultural Research and Education. 

Table 1: Allocation towards the Ministry of Agriculture and Farmers Welfare (in Rs crore)

	2024-25 Actuals	2025-26 RE	2026-27 BE	% change from RE 2025-26 to BE 2026-27
Agriculture and Farmers Welfare	1,29,933	1,23,089	1,30,561	6%
Agricultural Research and Education	9,811	10,281	9,967	-3%
Total	1,39,744	1,33,370	1,40,529	5.4%

Note: BE- Budget Estimates; RE- Revised Estimates.
Sources: Expenditure Budget, Ministry of Agriculture and Farmers Welfare, Union Budget 2026-27; PRS.

Key Announcements in Budget Speech 2026-27 Bharat VISTAAR:  A multi-lingual Artificial Intelligence tool will be launched to integrate AgriStack portals and the ICAR package on agricultural practices.  Rs 150 crore has been allocated for this scheme in 2026-27. Coconut Promotion Scheme:  Initiatives under this scheme aim to replace old and non-productive trees with new varieties and plants in major coconut growing states. Dedicated programmes have been proposed for enhancing production, processing, and export competitiveness of coconut, sandalwood, cashew, cocoa, and nuts.  Rs 350 crore has been allocated as support for high value agriculture.

Key Expenditure Heads

PM-KISAN: The highest allocation in 2026-27 is for the PM Kisan Samman Nidhi scheme (PM KISAN).  The scheme has been allocated Rs 63,500 crore, which is about 45% of the Ministry budget.  This allocation is the same as the revised estimates of 2025-26.  PM KISAN is a central sector scheme which was operationalised in December 2018.[1]   Under the scheme, income support of Rs 6,000 per year is given to landholding farmer families in three equal instalments.1  The benefit per farmer under the scheme has remained the same since its inception.  

MISS:  The second-highest allocation (16% of the total ministry budget in 2026-27) is towards Modified Interest Subvention Scheme (MISS).  Under this scheme, interest subvention is provided for credit to farmers through Kisan Credit Cards.[2]^,[3]  In 2026-27, Rs 22,600 crore have been allocated to the scheme, which is the same as the allocation for 2025-26.

Krishionnati Yojana:  Krishionnati Yojana and Rashtriya Krishi Vikas Yojana (RKVY) are two umbrella schemes under the Ministry.  RKVY was launched in 2007 as a scheme to provide incentives to states to draw up their comprehensive agricultural development plans.  The scheme currently has sub-components which focus on the following: (i) soil health and fertility, (ii) agricultural mechanisation, (iii) crop diversification, (iv) rainfed area development, and (v) irrigation.  In 2026-27, Rs 8,550 crore have been allocated to this scheme, 22% higher than the revised estimates of 2025-26.  Krishionnati Yojana has been allocated Rs 11,200 crore for 2026-27.  This scheme subsumed earlier schemes such as the scheme on agricultural marketing, the national food security mission, the national mission on horticulture, and the scheme on agriculture census and statistics.

Table 2: Allocation towards key schemes under the Ministry (in Rs crore)

	2024-25 Actuals	2025-26 RE	2026-27 BE	% change from 2025-26 RE to 2026-27 BE	Share in Ministry's budget
Department of Agriculture and Farmers Welfare
of which
PM Kisan Samman Nidhi	66,121	63,500	63,500	0.0%	45%
Modified Interest Subvention Scheme	22,600	22,600	22,600	0.0%	16%
Crop Insurance Scheme	14,473	12,267	12,200	-0.5%	9%
Krishionnati Yojana	5,600	6,800	11,200	64.7%	8%
Rashtriya Krishi Vikas Yojana	7,386	7,000	8,550	22%	6%
PM Annadata Aay Sanrakshan Yojna (PM-AASHA)	5,438	6,941	7,200	3.7%	5%
Namo Drone Didi	1	100	677	576.9%	0.5%
Support for high-value agriculture	-	-	350	0.0%	0.2%
Agriculture Infrastructure Fund	725	900	910	1.1%	0.6%
Department of Agricultural Research and Education
of which
Autonomous Bodies	6,836	7,313	7,096	-3.0%	5.0%
Crop science for food and nutritional security	894	965	970	0.4%	0.7%
Strengthening Agricultural Education, Management & Social Sciences	621	645	515	-20.2%	0.4%

Sources:  Expenditure Budget, Ministry of Agriculture and Farmers Welfare, Union Budget 2026-27; PRS.

PM-AASHA:  The government introduced the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) in 2018 to ensure remunerative prices to farmers for production of oilseeds, pulses, and copra.  In September 2024, the price support scheme and the market intervention scheme were converged under PM-AASHA.  This scheme has been allocated Rs 7,200 crore, an increase of 3.7% over the revised estimate of 2025-26. 

Agriculture Infrastructure Fund (AIF):  AIF was launched in 2020 to strengthen agriculture infrastructure through creation of farm gate storage and logistics infrastructure.[4]  A provision of Rs 1,00,000 crore was made under the fund, from which loans are disbursed through lending institutions with an interest rate up to 9%.[5]  In 2026-27, Rs 910 crore have been allocated to this fund.

Namo Drone Didi Scheme:  This scheme was launched in November 2024 to provide drones to women self-help groups which can be rented to farmers for agricultural purposes.  Under the scheme, a subsidy is provided up to 80% of the cost of a drone.  In 2026-27, Rs 677 crore have been allocated for this scheme.  In 2025-26, the expenditure under this scheme is estimated to be Rs 100 crore, against the budget allocation of Rs 677 crore (85% lower).

Figure 1:  The Ministry has utilised 90% of the allocated funds between 2015-16 and 2025-26

Note: Revised Estimates have been used as Actuals for 2025-26.
Sources: Budget Documents for various years; PRS.

Growth in Agriculture

According to the Land Use Statistics, 50% of the total 307 million hectare of land across states is used for agricultural purposes in India.[6]  Between 2011-12 and 2024-25, the agriculture and allied sector grew at an annual rate of 4% while the overall GDP growth in this period was 6% (see Figure 2 on next page).  Within the agriculture sector, output value of the allied sectors grew at an annual rate of 5% between 2011-12 and 2023-24, as compared to the crop sector which grew at 2% annually.[7]  Allied sectors consist of livestock, forestry and logging, and fishing and aquaculture. 

Figure 2: Growth in agriculture has been volatile between 2011-12 and 2024-25 (in %)

Sources: Ministry of Statistics and Programme Implementation; PRS.

A report released by the Ministry of Statistics and Programme Implementation (MoSPI, 2025) noted that this growth variance highlights a gradual diversification within the agriculture sector.7  It observed that this diversification reflects changing demand patterns, policy support, and technological improvements.7 

Agriculture and allied sector accounts for 18% of India’s total economic output, measured as a share of Gross Value Added (GVA).  However, it employs about 46% of the workforce in India despite its low contribution to economic output (see Figure 3).

Figure 3: Agriculture and allied sector employs the largest share of workforce (in %)

 

Sources: National Account Statistics, Periodic Labour Force Survey, MoSPI; PRS.

Issues for Consideration

The agriculture sector in India faces several issues across the value chain including low productivity of crops, dependence on rain-fed agriculture, inequitable and insufficient access to factors of production, and rising water stress across states.

Low Agricultural Productivity

Agricultural productivity is measured as a ratio of total agricultural output to total input, including land, labour, fertiliser, and machinery.  The Committee on Doubling Farmers Income (DFI, 2018) noted that the productivity of various crops in India is lower than those in other countries (see Table 3).[8]  It observed that the average crop yield in such countries is higher due to better input management and longer growing periods. 

Table 3:  Global yield comparison of major crops (in kg/hectare)

Country	Yield (in kg/hectare)
Paddy
India	4,229
China	7,076
Bangladesh	4,891
Indonesia	5,238
Wheat
India	3,537
China	5,855
Russia	3,551
USA	3,127
Maize
India	3,387
USA	10,880
China	6,436
Russia	5,999
Sugarcane
India	84,906
Brazil	73,393
Thailand	60,388
China	79,822

Sources: Unified Portal for Agricultural Statistics, as accessed on January 3, 2026; PRS.

The Commission for Agricultural Costs and Prices (2025) noted the following as reasons for a higher yield gap in agriculture: (i) non-availability of inputs and services, (ii) fragmented land holdings, and (iii) lack of farm mechanisation.

The DFI Committee (2018) recommended enhancing agricultural productivity through minimising yield gap of various crops.  It recommended achieving this through improvement in market access, purchasing power of consumers, productivity enhancement of agricultural workforce, and improved water and fertiliser management. 

Fragmented Landholdings

An operational holding is defined as land which is wholly or partially used for agricultural production and is operated as a unit by one person.[9]  According to the Agricultural Census data (2015-16), India’s agriculture sector is dominated by marginal and small farm holdings.[10]  According to this data, around 68% of the total land holdings were marginal land holdings (less than 1 hectare) while the area covered by these marginal land holdings was 24% of the total operational area covered.

Figure 4: Number and area of operational landholdings by size group (as a % of total)

Sources: Agricultural Statistics at a Glance 2022; Ministry of Agriculture and Farmers Welfare, April 5, 2023; PRS.

The DFI Committee noted that over the years, the average size of landholdings has declined.  The number of semi-medium, medium, and large land holdings have declined significantly.  On the other hand, between 1980-81 and 2010-11, the number of marginal and small holdings has increased.  It attributed this decline in average size of operational land holdings to an increase in rural population.  In addition, area under farming has also declined due to the diversion of farm area for non-agricultural purposes. 

Figure 5: Average size of operational holdings (in hectare)

Sources: Agriculture Census 2015-16; PRS.

The National Commission on Farmers (Chair: M.S. Swaminathan) observed that fragmented and scattered operational holdings are a major challenge to productivity.10  Lower average size of holdings affects the scale of production, adoption of technology, marketable surplus left with the farmer, access to accredit and other support services.10 

The DFI Committee (2018) observed that Farmer Producer Organisations (FPOs) and Village Producer Organisations (VPOs) offer the benefits of operations at scale to small and marginal farmers at different stages of the agricultural value chain.[11]  The Committee noted that such collectives increase the bargaining power of each farmer-member and recommended a minimum 7,000 FPOs and VPOs by 2022-23.11 

The government launched a central sector scheme for formation and promotion of 10,000 FPOs in 2020.[12]  The scheme was launched with a total outlay of Rs 6,865 crore.12  Under this scheme, financial assistance of Rs 18 lakh per FPO is provided for a period of three years.12  As of December 31, 2025, 10,000 FPOs have been registered under the scheme.12  In 2026-27, Rs 500 crore has been allocated towards this scheme.  This is 14% lower than the revised estimates for 2025-26.

Access to credit

Access to timely and affordable credit is a critical constraint across multiple stages of the agricultural value chain, from input procurement to post-harvest operations.  Working capital is required by farmers during multiple stages of the agricultural supply chain including: (i) at the beginning of the growing season, (ii) during later stages of production and harvesting, (iii) for investment in farm machinery, and (iv) for harvesting, processing, transport, and marketing. 

A report by NITI Aayog (2022) observed a formal credit gap among Indian farmers.[13]  It noted that around 30% of India’s agricultural households have borrowed money from non-institutional sources.  These sources largely include relatives, friends, or informal moneylenders.  The report also noted that according to a NABARD survey (2018), farmers with plot sizes smaller than two hectares took a greater share of loans from non-institutional lenders (See Figure 6).

Figure 6:  Distribution of outstanding loans per agricultural household (in %)

Sources: Situation Assessment of Agricultural Households and Land and Holdings of Household in Rural India, 2019; PRS.

The flow of institutional credit to the agriculture sector has grown at an annualised rate of 14% between 2012-13 and 2023-24.[14]  Institutional credit has grown from Rs 6 lakh crore in 2012-13 to Rs 25 lakh crore in 2023-24.14

To provide farmers access to affordable credit at cheaper rates, the Kisan Credit Card (KCC Scheme) was launched by the government in 1998.[15]  It targets provision of credit for post-harvest expenses, marketing loans, consumption requirements of farmer household, capital for maintenance of farm assets, and short-term credit requirement for cultivation.15 

As of March 2025, a total of 7.7 crore KCCs were operational with total amount outstanding worth Rs 10.2 lakh crore.[16]  The Ministry of Agriculture and Farmers Welfare increased the limit under KCC from three lakh rupees to five lakh rupees in 2025-26.[17]  In 2006-07, the Interest Subvention Scheme was launched offering KCC loans at 7% interest.  This scheme was modified in 2022 as the Modified Interest Subvention Scheme (MISS) under which farmers can avail short-term credit at a subsidised interest rate of 7%.    

Under the Formation and Promotion of 10,000 FPOs scheme, each FPO is provided financial assistance up to Rs 18 lakh over a three-year period.[18]  In addition, a matching equity grant up to Rs 2,000 per farmer member of the FPO is being provided, with a maximum limit of up to Rs 15 lakh per FPO.18  The government is also issuing a credit guarantee of up to crore rupees per FPO for loans secured from eligible lending institutions.18  As of December 31, 2025, credit guarantees worth Rs 663 crore have been issued to FPOs and Rs 431 crore has been distributed as matching equity grants to around 6,500 FPOs.18

Access to quality inputs

NITI Aayog (2022) highlighted the importance of increasing the use of high-yielding variety seeds, expanding irrigation coverage, improving use of fertilisers and pesticides, and greater mechanisation of agriculture to improve agricultural productivity.13 

Access to quality seeds

In 2018, the DFI Committee observed that the use of quality seeds can boost agricultural productivity by 15-20%.[19]  Further, it noted that productivity can further be raised up to 45% with efficient management of other inputs such as water, fertilisers, and cultivation practices.19  Therefore, the use of quality seeds is important for enhancing productivity and improving climate resilience in agriculture. 

A Report by the Commission for Agricultural Cost and Prices (2025) highlighted inadequate access to good quality seeds as one of the major constraints faced by farmers.[20]  It noted the lower adoption of improved varieties of seeds, despite the release of large number of varieties.20

A report by NITI Aayog (2018) noted that farm saved seeds are often degenerated and poor in vigour.[21]   This adversely affects the productivity of crops and its yield.21  Farmers in India currently use purchased seeds or seeds saved from previous harvests.

Seed replacement ratio (SSR) measures how much of the total cropped area is sown with certified seeds in comparison to farm saved seeds.21  NITI Aayog observed a demand supply mismatch as one of the reasons for lower SRR across states.  It noted that a large share of total cultivated area is sown with farm saved seeds (see Table 4).21  In addition, certified seeds are adequately available for fruits, vegetables, flowers, and high value crops.21  However, not enough seeds are supplied for low-value and high-volume crops such as rice and wheat.21  NITI Aayog (2018) observed that adequate seeds of good variety need to be produced to achieve the desired level of SRR.21

Table 4: Seed replacement rate in India for major crops (in %)

Crop	2011-12	2019-20	2025-26*	2030-31*
Rice	36	38	40	43
Wheat	33	42	41	45
Nutri-cereals	42	41	55	58
Maize	57	68	64	66
Pulses	25	42	44	48
Oilseeds	48	44	45	45
Sugarcane	10	10	10	10

Note: *SRR for 2025-26 and 2030-31 is projected by NITI Aayog on the basis of growth between 2011-12 and 2021-22.
Sources:  Crop Husbandry, Agriculture Inputs, Demand and Supply, NITI Aayog, 2024; PRS.

A National Mission on High-Yielding Seeds was announced in the 2025-26 Union Budget with a total outlay of Rs 100 crore.  However, according to the revised estimates for 2025-26, no funds under the Mission have been utilised.  Further, no funds have been allocated towards the Mission for 2026-27.  The Mission was announced with the following objectives: (i) to ensure commercial availability of more than 100 seed varieties, (ii) development and propagation of climate and pest resilient high-yielding variety (HYV) seeds, and (iii) strengthening research on HYV seeds.21

The Ministry of Agriculture and Farmers Welfare released a draft Seeds Bill, 2025 in November 2025 for public comments.[22]  The draft Bill aims to regulate the quality of seeds and planting materials to ensure availability of quality seeds for farms.  It also aims to curb the sale of spurious and poor-quality seeds.22 

NITI Aayog (2025) observed the importance of continued investment in research and development for improved yield and productivity.[23]  In 2025, the Indian Council for Agricultural Research developed India’s first genome-edited rice varieties.[24]  The advanced varieties are expected to offer the following benefits: (i) a 19% increase in yield, (ii) a 20% reduction in greenhouse gas emissions, (iii) saving of 7,500 cubic meters of irrigation water, and (iv) improved tolerance to drought, salinity, and climate stress.24 

Dependence on rain-fed agriculture and irrigation practices

The area under irrigation has increased from 44% of total cultivated area in 2000-01 to 63% in 2023-24 at the national level.[25]  The remaining cultivated area is under rainfed agriculture.  Further, the irrigation coverage is uneven across crops (see Table 5).

Table 5:  Area under irrigation under different crops (2022-23, in thousand hectare)

Crop	Area under cultivation	Area under irrigation	% area irrigated
Rice	49,525	34,140	69%
Jowar	3,639	459	13%
Bajra	7,574	963	13%
Wheat	34,994	33,434	96%
Gram	9,790	3,860	39%
Sugarcane	6,794	6,716	99%

Sources:  Land Use Statistics 2022-23; PRS.

In 2020, agriculture accounted for 89% of total annual water extraction in India.13  Despite this, irrigation in India remains inefficient and unsustainable.19  The DFI Committee (2018) noted that under the prevailing irrigation system, there is a wide gap between the irrigation potential created and irrigation potential utilised.19

Efficient irrigation helps increase crop yields, optimise water use, and reduce pressure on depleting groundwater resources.[26]  The per-tonne water requirement (measured as cubic meter of water used to produce one tonne of crop) for major crops such as rice, wheat, cottonseed, and soyabean in India is significantly higher than other major countries (see Table 6).

Table 6:  Water use for crops (in cubic meter per tonne)

Crop	India	US	China
Rice	4,254	1,903	1,972
Wheat	1,654	849	690
Soyabean	4,124	1,869	2,617
Sugarcane	159	103	117
Cottonseed	8,264	2,535	1,419

Sources: National Water Mission, Ministry of Jal Shakti and NITI Aayog; PRS.

In 2022-23, 49% of the total irrigated area was irrigated through tubewells (see Figure 7).25  The Standing Committee on Water Resources (2023) noted over extraction of groundwater for irrigation in states including Punjab, Haryana, Rajasthan, Karnataka, Tamil Nadu, and Uttar Pradesh.  The Committee attributed this over extraction primarily to wide cultivation of water guzzler paddy and sugarcane crops.25  Other contributing factors include assured market procurement for certain crops and highly subsidised pricing of water, power, and fertilisers.25  NABARD (2018) noted that most of these water guzzling crops are concentrated in some of the most water scarce regions of the country, which is leading to severe depletion of groundwater reserves in these states.25

Figure 7: Sources of irrigation for gross cropped area (in %)

Sources:  Land Use Statistics 2022-23; PRS.

The DFI Committee (2018) identified the following as reasons for sub-optimal utilisation of created facilities: (i) inadequate maintenance of canal systems, (ii) lack of participatory management, (iii) changing land use pattern, and (iv) soil degradation.19  It noted a high proportion of cultivated area being diverted for water guzzling primary crops.19  The Committee recommended diversification of crops to low-water consuming crops such as maize, pulses, and oilseeds.19

Commission of Agricultural Costs and Prices (CACP, 2025) noted that efficient irrigation techniques including drip and sprinkler irrigation help reduce water waste through precise irrigation.  The Pradhan Mantri Krishi Sinchayee Yojana was launched in 2015-16 to improve water use efficiency and expand irrigation coverage (see Figure 8).  The scheme was launched with the following objectives: (i) increase area under irrigation, (ii) improve on-farm efficiency of water use, (iii) enhance adoption of precision irrigation, (iv) enhance recharge of aquifers, and (v) promote sustainable water conservation practices.[27]

Figure 8:  Annual area covered under Per Drop More Crop component (in lakh hectare)

Sources:  Per Drop More Crop Dashboard, as accessed on February 6, 2026; PRS.

Only one component under this scheme is currently implemented by the Ministry of Agriculture and Farmers Welfare.  The Per Drop More Crop component under PM Krishi Sinchayee Yojana is a micro irrigation scheme aimed at enhancing water efficiency.   

Usage of Fertilisers

Dependence on imports

The month-wise requirement of fertilisers is assessed before the commencement of each cropping season by the Ministry of Agriculture and Farmers Welfare.[28]  The Department of Fertilisers under the Ministry of Chemicals and Fertilisers is responsible for ensuring adequate and timely availability of fertilisers in the country.28  The Ministry ensures this by planning production, imports, and distribution of fertilisers at affordable prices to farmers.

The consumption of chemical fertilisers in India has increased from 92 kg of fertilisers used per hectare in 2001-02 to 150 kg per hectare of land in 2024-25.25  Out of total consumption, the share of Nitrogenous (N) fertilisers is 67%, Phosphatic (P) fertilisers is 25%, and Potassic (K) fertilisers is 7%.25

Figure 9: Consumption of Nitrogenous, Phosphatic, and Potassic fertilisers (in kg per hectare)

Sources:  Agricultural Statistics at a Glance 2024-25; PRS.

The country is heavily dependent on imports of raw materials for fertiliser production.  Around 89% and 28% of the total potassic and phosphatic consumption requirement is fulfilled through imports respectively.  The Standing Committee on Chemicals and Fertilisers (2025) noted that the country has deficient reserves of phosphate and no reserves of potash (see Table 7).[29]  This has made the country dependent on imports for fertiliser production.  The Committee (2025) observed a gap between the domestic production and consumption of fertilisers in India.  In 2024-25, against the total requirement of 329 lakh tonne of NPK fertilisers, only 148 lakh tonne was produced domestically.  The Committee (2025) recommended the Department to intensify its measures to ensure timely completion of new fertiliser projects and capacity enhancement initiatives.29  It recommended expanding P&K fertiliser capacity through fiscal and tax incentives for setting up new units.29

Table 7:  Reserves of phosphate rock across countries

Country	Reserves (in lakh tonne)
Morocco and Western Sahara	5,00,000
China	32,000
Egypt	28,000
Algeria	22,000
Brazil	16,000
South Africa	16,000
Saudi Arabia	14,000
Australia	11,000
Russia	6,000
Israel	530
India	460

Sources: Report No. 15, Standing Committee on Chemicals and Fertilisers, December 1, 2025; PRS.

Between 2001-02 and 2024-25, consumption of NPK fertilisers grew at an annual average rate of 2.8%.25  In comparison, domestic production of NPK fertilisers only grew at an annual average rate of 0.1%.25  Between this period, the imports of NPK fertilisers grew at 5.2% annually.25   Therefore, most of the increase in consumption is being fulfilled through increased imports.

Figure 10:  Production and import of fertilisers (in lakh tonne)

Sources:  Agricultural Statistics at a Glance 2024-25; PRS.

Imbalanced use of chemical fertilisers

The government offers subsidy to manufacturers on the production of fertilisers.  Under the Nutrient Based Subsidy (NBS) scheme, a fixed amount of subsidy is provided per kg of nutrient contained in P&K fertilisers.[30]  The MRP for P&K fertilisers is determined on the basis of market prices and fixed by fertiliser companies.30  The government provides a fixed subsidy to manufacturers which is notified on an annual/semi-annual basis.30 

The broad varieties of chemical fertilisers used by farmers in the country include Urea, DAP, MOP, NPKS, and SSP.  The NBS scheme is applicable on all of these fertilisers except Urea fertilisers.29

The government also provides a subsidy for urea fertilisers.  The urea subsidy scheme has three different components: (i) indigenous urea subsidy provided to domestic urea production units, (ii) imported urea subsidy directed towards imports, and (iii) a freight subsidy for movement of urea across the country.  Under the current scheme, urea is provided to farmers at a statutorily notified MRP of Rs 242 per bag of 45 kg urea.  The Standing Committee on Chemicals and Fertilisers (2025) noted an imbalance skewed towards excessive application of nitrogenous or Urea based fertilisers.29  It noted that indiscriminate and imbalanced use of fertilisers can lead to multi-nutrient deficiencies and deterioration of soil-health over the years.29  The Committee (2024) also noted that since the prices of P and K fertilisers are decontrolled, the market prices of these fertilisers have increased.[31]  This has led to farmers overconsuming the price regulated urea fertiliser.31  The Standing Committee (2024) also recommended the government to review its NBS policy to remove the disincentives for farmers to overuse urea.31

CACP (2025) observed that a higher subsidy on Urea in comparison to P&K fertilisers is leading to excessive consumption of nitrogenous fertilisers (see Table 8).20  The ideal ratio for application of N:P:K fertilisers is recommended at 4:2:1.31  NITI Aayog (2022) observed that soil health cannot be maintained without the regular application of organic manures and recycling of crop residue.13

Table 8:  All-India consumption ratios of Nitrogen and Phosphorus based fertilisers

Year	N : P : K Ratio
Ideal ratio	4 : 2 : 1
2018-19	6.6 : 2.6 : 1
2019-20	7.3 : 2.9 : 1
2020-21	6.5 : 2.8 : 1
2021-22	7.7 : 3.1 : 1
2022-23	11.8 : 4.6 : 1
2023-24	10.9 : 4.4 : 1

Sources:  Price Policy for Kharif Crops, 2025-26, Commission for Agricultural Costs and Prices; PRS.

In 2026-27, Rs 1,70,799 crore has been allocated towards the NBS and Urea Subsidy scheme (see Figure 11) by the Ministry of Chemicals and Fertilisers.  Total fertiliser subsidy is estimated to be 3.2% of the total budget of the central government in 2026-27. 

Figure 11:  Fertiliser subsidy offered on P&K and Urea fertilisers (in Rs crore)

Sources:  Statement 7, Union Budget of various years; PRS.

Total fertiliser subsidy bill of the Union government has increased at an average rate of 8% annually between 2015-16 and 2026-27 (BE).  The subsidy bill increased significantly in 2022-23 due to high input costs, geopolitical tensions, global supply chain disruptions, and export restrictions from China.[32] 

Extension Services

NITI Aayog (2022) noted the importance of extension services in transfer of scientific knowledge, improved technologies, and sustainable agricultural practices to farmers.13  Extension services help farmers get information regarding scientific research and new knowledge in agricultural practices.[33]  In India, extension services are delivered through public agencies, Krishi Vigyan Kendras, agricultural universities, private firms, and digital platforms.  The DFI Committee (2018) had identified issues in delivering extension services including manpower shortage, non-harmonised and narrow range of activities, poor targeting of farmers, weak monitoring mechanisms, and poor outreach.[34]  The Economic Survey (2025-26) also observed that delivery of extension services still struggles with the same issues.[35] 

The government introduced the PM Program for Restoration, Awareness Generation, Nourishment, and Amelioration of Mother Earth (PM-PRANAM) scheme in June 2023.[36]  The PM-PRANAM scheme aims to incentivise states that actively contribute to reducing the use of chemical fertilisers in a year (Urea, DAP, NPK, and MOP).[37]  Under this scheme, states are given grants on the basis of reduction in fertiliser consumption compared to the average consumption over the previous three years.  However, as of February 2026, no incentives have been released to any state.37

Crop Insurance

The government provides crop insurance to farmers against all non-preventable natural risks from pre-sowing to post-harvest stage.  Agricultural insurance is provided under the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS).  These schemes cover all farmers including sharecroppers and tenant farmers growing notified food crops, oilseeds, and horticulture crops.[38]  In 2026-27, the government has allocated Rs 12,200 crore to the crop insurance schemes, which is similar to the revised estimates of 2025-26.

Under PMFBY, insurance coverage is offered to farmers at a maximum premium of 2% of sum insured to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops.  The maximum premium to be paid by farmers for commercial and horticultural crops is 5%.  The balance of the prevailing premium and the premium paid by the farmers is paid by the government.  This premium subsidy is shared equally between the centre and states.  Some states are also paying the farmers’ share of premium, where the farmer is only required to pay one rupee.[39]  These states include Maharashtra, Odisha, Meghalaya, Puducherry, and Jharkhand.

The DFI Committee (2018) noted that only 20% of the Gross Cropped Area (GCA) was insured in 2014-15.  The Committee also noted the aim of the government to scale up the insurance penetration to about 50% of GCA by 2019.[40]   In 2022, 28% (621 lakh hectare) of the total gross cropped area was insured under PMFBY and RWBCIS.[41]^,[42] 

Figure 12:  Claims paid to farmers in recent years have declined

Note: The data for all years is as reported on PMFBY Dashboard.
Sources: PMFBY Dashboard, as accessed on February 18, 2026; PRS.

On average, claims worth Rs 21,288 crore have been paid to farmers every year under the two schemes between 2016 and 2024.  However, claims paid under the scheme have reduced significantly to only Rs 576 crore in 2025, while the area insured in the same year has not changed much.  Similarly, the premiums paid by the centre and state have also reduced in 2025 by Rs 10,092 crore (see Figure 13).

Figure 13:  Premiums paid under the scheme by the centre, states, and farmers (in Rs crore)

Sources: PMFBY Dashboard, as accessed on February 18, 2026; PRS.

The Standing Committee on Agriculture (2021) has observed that delays in settlement of claims is one of the major challenges in implementation of PMFBY.[43]  It noted the following as reasons for delays in settlement of claims: (i) delayed transmission of yield data, (ii) late release of state share in premium subsidy, (iii) late release of yield data by states, and (iv) yield related disputes between insurance companies and states.43  The Committee also recommended that the premium paid by the farmer should be returned with interest if the reason for delay is non-payment of subsidy by state.43 

The Standing Committee on Agriculture (2024) recommended exploring the possibility of provision of compulsory universal crop insurance for smallholder farmers with land holding up to two hectare.[44] 

Post harvest infrastructure

Post-harvest losses refer to the degradation in the quality and quantity of food between the harvest and consumption stage.[45]  Post harvest losses may adversely impact the productivity of the food processing sector.45  Many agricultural and allied products are seasonal and perishable in nature, which need processing in short periods of time.  

According to a study to determine post-harvest losses in 2020-21, the quantity of agriculture produce lost in 2020-21 was estimated at about 69 million metric tonnes (5.5% of the total agricultural produce).45  These include cereals, pulses, oilseeds, fruits, vegetables, plantation crops, and livestock produce (see Table 9).45

Table 9: Post-harvest losses in 2020-21

Category	Quantity Lost (in million tonne)	Monetary loss (in Rs crore)
Livestock produce	3	29,871
Fruits	7.3	29,545
Vegetables	12	27,459
Cereals	12.5	26,001
Plantation crops	30.6	16,413
Oilseeds	2.1	10,925
Pulses	1.4	9,289
Total	68.9	1,49,503

Sources: Study to determine post-harvest losses in agri produces in India - 2022, NABCONS, MoFPI; PRS.

These categories contributed to a loss of about Rs 1.5 lakh crore.45  The highest contributors to monetary loss were perishable commodities such as fruits and vegetables, and livestock produce.45  The Standing Committee on Agriculture (2024) observed that favourable policies and infrastructure development for processing and storage are needed to reduce post-harvest losses.[46]  These measures are required across stages such as harvesting, collection, transport, processing, and packaging. 

To address this issue, the Ministry of Food Processing Industries has been implementing the PM Kisan Samapada Yojana.  The scheme targets building of storage and transportation infrastructure, agro-processing cluster, and food processing and preservation capacities.  

The DFI Committee (2018) had observed that a significant proportion of the produce is also wasted during periods of abundant supply and in the absence of an assured price.10  In such cases, farmers may sometimes not even recover the logistics cost due to distress sale.10

Another reason for perishable loss is inadequate and inefficient storage infrastructure between consumers and the farm gate.10  Dr. Saumitra Chaudhari Committee (2012) had estimated the cold storage requirement in the country to be 61 million tonne.[47]  The Committee was constituted by the erstwhile Planning Commission.  As of January 2025, the cold storage capacity across states was estimated at 39.7 million tonne.14

In August 2024, the AIF scheme was expanded to: (i) extend the financing facility period from 2023-24 up to 2025-26, (ii) extend the overall operational period from 2029-30 up to 2032-33, (iii) expand eligible beneficiaries to include Agricultural Produce Market Committees and state agencies, and (iv) broaden the scope of eligible assets to include integrated processing projects and community level farming infrastructure assets.[48] 

As of February 18, 2026, a total of Rs 60,583 crore has been disbursed for around 1.43 lakh projects.[49]  Through these loans, funds have been extended for projects including primary processing units, warehouses, sorting and grading units, and cold storage projects.  In 2026-27, AIF has been allocated Rs 910 crore, which is 1.1% higher than the revised estimates of 2025-26.

Agricultural Marketing

The government introduced the Agricultural Marketing Infrastructure scheme (AMI) in 2014.  Under the scheme, financial support is provided to farmers, individuals, food processing units, cooperatives, agri-entrepreneurs, and state agencies, for creating storage and agricultural marketing infrastructure. 

As of March 2024, a total of 69,101 projects have been sanctioned under the AMI scheme.[50]  For these projects, subsidy worth Rs 6,301 crore has been released under the scheme.50   

Agriculture markets are regulated in India by Agriculture Produce Marketing Committees (APMCs).  APMCs are established by state governments.  APMCs regulate trade by: (i) providing licenses to traders/ commission agents, (ii) levying market fees/ cess on sale of agricultural produce in the APMC market, and (iii) providing the necessary infrastructure within markets to facilitate trade.[51] 

The National Commission on Farmers (2006) had recommended that there should be a market within a range of 5 km of farms, a distance negotiable by walk or cart in an hour.  In 2019, the Standing Committee on Agriculture noted that to meet this norm, 41,000 markets will be needed in the country.  In 2023, there were 7,085 APMC regulated mandis in the country.[52]

In 2016, the central government launched the National Agriculture Market (e-NAM), an electronic trading portal aimed at integrating existing APMC mandis into a unified national market for agricultural commodities.[53]  Under the scheme, the government provides free software and financial assistance of up to Rs 75 lakh per APMC market for integration with the portal.  As of January 2026, 1,522 mandis across 23 states and 4 union territories had been integrated with e-NAM.[54]  The Standing Committee on Agriculture (2019) recommended expanding the coverage of the e-NAM scheme in states where APMC markets are non-existent.

Farmer Producer Organisations

The DFI Committee (2018) noted the need to expand the efforts of FPOs to marketing and post-production efforts.[55]  It observed that the lack of market connectivity will lead to the collaborative output being directed only towards local markets.55  The Committee recommended linking FPOs to multiple demand centres.55  This would lead to faster outflow of produce and inflow of returns for farmers.55

Under the FPO scheme, Cluster Based Business Organisations (CBBOs) are being linked to FPOs to offer them professional handholding support for up to five years.18  CBBOs are engaged in linking FPOs with buyers and processors outside the traditional mandi system and local markets.18

Additionally, FPOs are being onboarded on digital platforms such as Open Network for Digital Commerce (ONDC) and Government e-Marketplace (GeM) platforms.  As of June 30, 2025, more than 9,000 FPOs have been onboarded on ONDC platform, with 216 FPOs on the GeM portal.[56]  This has allowed FPOs to sell their agri-produce digitally.56  In addition, 171 business organisations have established backward market linkages with around 500 FPOs for procurement of raw materials, finished agri-products, and agri commodities.56

Remunerative pricing and procurement

Minimum Support Price:  The government fixes the Minimum Support Price (MSP) for 22 agricultural crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).  MSP is the assured price announced by the central government at which foodgrains are procured from farmers by the central and state governments and their agencies.[57]  For 2025-26, the MSP for paddy and wheat has been fixed at Rs 23.7 per kg and Rs 25.9 per kg.[58] 

Figure 14:  MSP recommended by CACP for paddy and wheat (in Rs per kg)

Sources:  Commission of Agricultural Costs and Prices, as accessed on February 15, 2026; PRS. 

In 2006, the National Commission on Farmers recommended setting the MSP for crops at least 50% higher than the weighted average of the production cost.  The Ministry adopted that recommendation in 2018-19, and MSP for all kharif and rabi crops was increased to reflect a return of at least 50% of the cost of production.[59] 

A2 indicates the cost incurred to produce the crop, and FL indicates the cost of family labour.26  A2+FL accounts for the cost of production plus value of family labour.26  C2 is the cost of production after including other costs such as family labour, rental value of owned land, and interest on fixed capital excluding land.26

Table 10: Minimum Support Price for select crops in 2025-26

Crop	Cost of production (in Rs per kg)			MSP as a proportion of A2+FL	MSP as a proportion of C2
	A2+FL	C2	MSP
Paddy	15.8	20.9	23.7	1.5	1.1
Wheat	12.4	18.0	25.9	2.1	1.4
Jowar	24.7	32.1	37.0	1.5	1.2
Bajra	17.0	22.1	27.8	1.6	1.3
Maize	15.1	19.5	24.0	1.6	1.2
Barley	13.6	18.6	21.5	1.6	1.2
Gram	37.0	48.8	58.8	1.6	1.2

Sources:  Commission of Agricultural Costs and Prices, as accessed on February 15, 2026; PRS. 

In 2024-25, 23% and 49% of the total wheat and rice produced was procured by the government respectively.  Punjab, Madhya Pradesh, Haryana, and Rajasthan alone accounted for 96% of the total wheat procurement in 2024-25.[60]  States such as Punjab, Chhattisgarh, Telangana, and Odisha accounted for 59% of the total rice procurement in 2024-25.

The Standing Committee on Agriculture (2024) recommended implementing a legally binding MSP system in the country.  It noted that legalising MSP would allow farmers with assured income to invest more in agricultural practices.  However, the DFI Committee (2018) noted that legalising MSP for all crops may lead to higher retail inflation.  It observed that when more crops are sold at MSP, these costs may be passed down to consumers leading to higher retail inflation.  

Procurement of pulses:  India is the world’s largest pulse cultivator and producer contributing 38% to the total global cultivated area, and 28% to the global pulses output.[61] 

Under the Price Support Scheme (PSS), the government intervenes by procuring MSP notified crops whenever their market prices of fall below MSP.  The procurement is made through central agencies such as NAFED, SFAC, and FCI.  However, this procurement has largely remained limited to pulses, oilseeds, and cotton.  Under the Market Intervention Scheme, horticulture crops not covered under MSP are procured when market price falls by more than 10%.

In 2026-27, Rs 7,200 crore have been allocated for the PM-AASHA scheme, which is 4% higher than the revised estimates for 2025-26.  Since 2018-19, PM-AASHA has covered 99 lakh farmers through procurement of 195 lakh metric tonne of pulses, oilseeds, and copra.[62]

In 2025-26, a budget announcement was made introducing the Mission for Pulses for procurement of pulses.  The scheme was allocated Rs 1,000 crore in 2025-26.  According to the revised estimates, no funds have been utilised under this scheme.  In 2026-27, no allocation has been made for this scheme.  In 2024-25, about 3% of the total pulses production was procured under PSS.  In India, food inflation is primarily driven by vegetables and pulses.35  RBI (2024) observed that to ensure stability in prices, procurement of pulses needs to be scaled up and operationalised.

Income Support through direct benefit transfers: Since its inception, Rs 4.09 lakh crore have been disbursed to beneficiaries through 21 instalments under the PM-KISAN scheme.[63]  Under the scheme, the amount is directly transferred to the farmer’s Aadhaar-seeded bank account.  However, as of February 6, 2026, there were around 30 lakh farmers whose Aadhaar is not seeded with bank accounts.63  The Standing Committee on Agriculture and Farmers Welfare (2020) noted that only landholding farmer families are covered under the scheme.[64]  It recommended extending the benefits to landless and tenant farmers.64