In a bid to combat rising food prices and bolster rural incomes, the Indian government is planning a significant increase in agricultural spending for the upcoming fiscal year. According to media reports, the budget allocation for the agriculture sector is set to rise by approximately 15% to around $20 billion, marking the largest increase in six years.

This substantial injection of funds will be directed towards several key areas like the development of high-yielding seed varieties, the expansion of storage and supply chain infrastructure, and the enhancement of production in crucial sectors such as pulses, oilseeds, vegetables, and dairy.

India, a major global producer of rice, wheat, and sugar, has been grappling with persistently high food prices. While inflation has eased slightly from its peak in October 2024, it has remained stubbornly elevated, averaging over 6% in the past decade.

To mitigate the impact of rising prices, the government has implemented a series of measures, including export restrictions on certain agricultural products like wheat and extending duty-free import policies for specific pulse varieties.

The upcoming budget, to be presented by Finance Minister Nirmala Sitharaman on February 1, is expected to allocate a total of Rs 1.75 trillion ($20.2 billion) for agriculture and allied activities in the 2025/26 fiscal year, a significant increase from the Rs 1.52 trillion allocated in the current fiscal year.

This increased allocation will encompass a rise in the budget for the agriculture ministry itself, as well as a substantial increase in research funding to develop new crop varieties.

Beyond addressing immediate concerns like inflation, the government aims to leverage this increased investment to enhance agricultural exports. The goal is to increase agricultural exports to $80 billion by 2030, a significant jump from the current level of $50 billion.

Furthermore, the government has ambitious plans to boost pulse production to 30 million metric tons by 2030 and has earmarked a significant $9 billion investment in the fisheries sector over the next five years.

The budget is also likely to include measures to support farmers directly, such as increasing the limit for subsidized farm loans and expanding crop insurance coverage.

To further incentivize growth within the agricultural sector, the government plans to provide incentives worth Rs 109 billion to food processing firms through 2027.

While these initiatives are expected to provide a significant boost to the agricultural sector, some analysts argue that they may not adequately address deeper issues such as low productivity and stagnant farm incomes.