Farming techniques such as precision farming, regenerative and natural farming practices, crop diversification and drone-based services are improving productivity and price realisation. However, these gains remain uneven, especially for small and marginal farmers, who constitute nearly 86 per cent of India’s agricultural households. As the Union Budget 2026–27 approaches, the focus should therefore shift from incremental support to structural transformation, ensuring sustainable, resilient and inclusive growth.
From fragmentation to scale: Production clusters
India’s agriculture continues to be constrained by fragmented landholdings and weak market linkages. A production cluster approach, supported through institutions like Farmer Producer Organisations (FPOs), offers a viable pathway to overcome these structural challenges.
Clusters enable aggregation of produce, collective input procurement, shared infrastructure and stronger bargaining power in markets. Budget 2026 should deepen support for Farmer Producer Organisations (FPOs), not merely by increasing their numbers, but by strengthening their functionality so that they can serve as effective platforms for professional management, access to working capital, market intelligence and post-harvest processing infrastructure. An additional opportunity lies in leveraging community institutions such as Self-Help Groups (SHGs) and Village Organisations (VOs) promoted under the National Rural Livelihoods Mission (NRLM), which can anchor FPOs at the grassroots and ensure wider farmer participation. Linking clusters to region-specific crops, allied livelihoods and agro–climatic suitability can significantly improve income stability and scale efficiencies.
Enabling agri-Entrepreneurs and the next generation of farmers
A critical but underleveraged opportunity lies in nurturing agri-entrepreneurs; rural women and youth who can deliver services such as nursery management, soil testing, input supply, market linkages and digital advisory services.
Targeted budgetary support for agri-enterprises, startup incubation in rural areas, concessional finance and skill certification can transform agriculture into a viable economic opportunity rather than a subsistence activity. Agri-entrepreneurs also act as local employment generators, strengthening rural economies while improving service access for smallholder farmers.
Water access as the foundation of agricultural resilience
No agricultural transformation is possible without assured access to water. Despite progress under irrigation and watershed programmes, a large share of Indian agriculture remains rain-fed and vulnerable to climate variability.
Budget 2026 should prioritise targeted investments in water harvesting, groundwater recharge, micro-irrigation, and solar-powered irrigation systems, particularly in drought-prone and tribal regions. Strengthening community-led water governance and enabling affordable credit for water and sanitation infrastructure can directly enhance productivity, reduce risk and stabilise farm incomes.
Scaling natural and climate-resilient farming
As climate risks intensify, promoting natural and regenerative farming has become essential. These practices reduce input costs, restore soil health, conserve water and lower farmers’ exposure to volatile chemical input markets.
Public investment should incentivise structures that reward sustainable practices. Strengthening crop insurance, weather-based advisories and climate-resilient seed systems will further help farmers adapt to changing agro-climatic conditions.
Leveraging flagship schemes for integrated impact
The PM Dhan Dhanya Krishi Yojana, covering 100 low productivity agricultural districts, presents an opportunity to operationalise convergence on the ground crop diversification, irrigation, storage and institutional credit in a mission-mode approach. Budgetary support should ensure that such schemes prioritise smallholder farmers, rain-fed regions and women-led collectives to maximise inclusive impact.
Expanding credit and financial inclusion to boost rural demand
Access to affordable and timely credit remains a cornerstone of agricultural growth. The agricultural credit target should be enhanced by 15–20 per cent, with greater emphasis on allied activities such as fisheries, poultry, livestock and dairy, sectors that offer stable income streams for smallholders.
Strengthening Kisan Credit Cards (KCCs), expanding interest subvention for smallholder and women farmers, and improving last-mile delivery of institutional credit can significantly reduce dependence on informal lenders.
Unlocking value through post-harvest infrastructure
Post-harvest losses estimated at 5–6 per cent, especially in fruits, vegetables and dairy continue to erode farmer incomes. Increased allocations for warehouses, cold chains, farm-gate storage and processing units are critical to reducing distress sales and price volatility.
These factors collectively contribute to the vision of Vikshit Bharat 2047, with the agricultural sector playing a pivotal role in achieving it.
(The author is Executive Director, PRADAN)
Published on January 24, 2026
