SUMMARY
The total allocation for agriculture and allied activities for FY 2025-26 may increase to about ₹1.75 lakh crore, according to reports. The government is also expected to increase the limit for subsidised farm loans to ₹5 lakh from the current ₹3 lakh per farmer under the Kisan Credit Card (KCC) scheme.
Agriculture is likely to be a key focus area in the upcoming Union Budget 2025 as the government has often been highlighting the welfare of farmers and self-reliance in food production. As Finance Minister Nirmala Sitharaman is set to present Budget 2025 on February 1, stakeholders expect an increased allocation for the agriculture sector and farmer-friendly initiatives.
Experts predict a higher budgetary allocation as reports suggest that the central government is planning to increase spending for the agriculture sector by up to 15% for FY 2025-26, which could be the biggest increase in allocation in the last six years.
Higher budgetary allocation for agriculture could help in arresting the gradual decline in rural incomes and rising food inflation.
According to some media reports, the total allocation for agriculture and allied activities for FY 2025-26 may increase to about ₹1.75 lakh crore compared to an allocation of ₹1.52 lakh crore announced in the previous Budget.
Where is this money expected to be spent?
Experts are hopeful that FM Sitharaman will announce strategic interventions to enhance productivity in agriculture and allied sectors, which employ nearly 46% of the country’s population.
The promotion of hybrid seeds to boost crop productivity is likely to be one of the key priorities. Indian farmers need to be supported by the development of resilient seeds that can better adapt to climatic volatility. This can help farmers increase their crop yields significantly and make more money from their existing land parcels.
The industry is, therefore, demanding higher investments in agricultural research and development with a focus on the development of more high-yielding varieties of seeds.
The government is also expected to increase the limit for subsidised farm loans to ₹5 lakh from the current ₹3 lakh per farmer under the Kisan Credit Card (KCC) scheme. Introduced in August 1998, KCC is a credit scheme offered by public sector banks. However, its limit has remained unchanged at ₹3 lakh since inception.
Raising the agricultural loan credit limit would support the farmers in dealing with escalating costs. Moreover, repayment norms are also expected to be eased to make the scheme more flexible for farmers. For instance, farmers may be allowed to settle the entire loan interest in one go at the end of the loan tenure instead of having to make periodic payments.
Demands of the agrochemicals sector
India’s agrochemicals sector is batting for a goods and services tax (GST) rate of 5% on various products instead of the current 18% to make quality crop protection cheaper for farmers.
The industry also wants the government to make these products more accessible to farmers, which would help in boosting productivity and profitability.
Experts are of the view that expanding the Production Linked Incentive (PLI) schemes for the agrochemical and fertiliser sectors will encourage domestic production and reduce reliance on imports.
Extending support to FPOs
The Union Budget 2025 should prioritise extending support to Farmer Producer Organisations (FPOs), Self-help Groups (SHGs), and cooperative societies.
According to reports, the government is likely to extend the central scheme for the promotion of FPOs by four to five years beyond the current end date of FY 2024-25.
To recall, the central sector scheme titled “Formation and Promotion of 10,000 FPOs” was launched in 2020 with a budgetary provision of ₹6,865 crore. The target was to create 10,000 new FPOs by March 2025, of which 9,200 have already been created as of October 2024.
Experts also suggest that digital platforms like the National Agriculture Market (e-NAM) and the Open Network for Digital Commerce (ONDC) should be integrated into the operations of these organisations. This would enable farmers to access better markets and conduct seamless transactions.
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