UNION AGRICULTURE BUDGET: ECONOMY

UNION AGRICULTURE BUDGET: ECONOMY

NEWS: Transforming Agricultural Finance

 

WHAT’S IN THE NEWS?

The Union Budget 2025 introduces key agricultural reforms through PM Dhan-Dhaanya Krishi Yojana, enhanced credit access, fisheries sector incentives, crop diversification policies, seed development programs, and self-sufficiency initiatives. It highlights employment in agriculture, challenges such as climate stress and modernization gaps, and policy-driven solutions to make Indian agriculture more resilient and productive.

 

1. Major Government Initiatives in Budget 2025

1.1 PM Dhan-Dhaanya Krishi Yojana

  • Objective: To boost agricultural growth in India by focusing on 100 districts under Phase 1.
  • Key Focus Areas:
  • Enhancing productivity through advanced farming techniques and better inputs.
  • Improving irrigation facilities to increase efficiency and reduce dependence on erratic rainfall.
  • Improving credit availability through financial schemes for farmers.
  • Promoting crop diversification to reduce dependency on water-intensive crops.
  • Augmenting post-harvest storage at the panchayat and block levels to reduce wastage.

 

1.2 Enhancing Credit & Financial Support

·         Kisan Credit Card (KCC) Interest Subvention:

  • Loan limit increased from ₹3 lakh to ₹5 lakh under the Modified Interest Subvention Scheme (MISS).
  • This helps farmers access low-interest loans and reduce their dependency on informal moneylenders.

·         Modified Interest Subvention Scheme (MISS):

  • Aims to provide affordable credit to small and marginal farmers.
  • Encourages investment in modernization, irrigation, and sustainable farming.

1.3 Boosting the Fisheries Sector

·         Budget Allocation Increased:

  • The government has allocated ₹1,500 crore more to the fisheries sector to improve productivity and export potential.

·         Custom Duty Reduction for Fish Paste:

  • Frozen Fish Paste custom duty reduced from 30% to 5% to support exporters and manufacturers in seafood processing.
  • Encourages value addition and global competitiveness of Indian seafood.

1.4 Crop Diversification & Self-Sufficiency

·         Atmanirbhar in Pulses:

  • A six-year-long mission to reduce dependency on tur, urad, and masoor imports.
  • Focus on higher domestic production and incentives for farmers to shift towards pulses.

·         Fox Seed (Makhana) Development:

  • ₹100 crore allocation for the Makhana Board of Bihar to boost the processing industry and value addition.
  • Aims to increase export potential and farmer income in Bihar, a major producer of makhana.

1.5 National Mission on Seeds

·         Objective:

  • To enhance research and development in seeds to promote high-yielding, pest-resistant, and climate-resilient varieties.
  • Aims to commercialize 100 new seed varieties to improve overall agricultural output.

·         Key Benefits:

  • Reduces crop failures due to climate change and pests.
  • Enhances farmers’ income through better productivity.

1.6 Mission for Cotton Productivity

  • Five-year mission aimed at improving productivity and sustainability in cotton farming.
  • Promotes extra-long staple cotton varieties to enhance fiber quality and competitiveness in global markets.
  • Integrates science and technology support to maximize yield and improve resistance against diseases.

1.7 Enhancing Fertilizer Self-Sufficiency

  • New Urea Fertilizer Plant in Assam:
  • Government announced a plant with an annual capacity of 12.7 lakh metric tons at Namrup, Assam.
  • Aims to reduce India's dependency on imported fertilizers.

 

2. Importance of the Agriculture Sector

2.1 Largest Employment Generator

  • 46.1% of India's workforce is engaged in agriculture and allied activities.
  • Agriculture remains the backbone of the rural economy, providing livelihoods to millions.

2.2 Women’s Participation in Agriculture

  • As per Oxfam, 80% of agricultural laborers in India are women.
  • Women-led Self-Help Groups (SHGs) are major contributors to agriculture and allied industries.

2.3 Linkages to the Food Processing Industry

  • Agriculture is closely linked to food processing, exports, and consumer markets.
  • A boost in agriculture leads to growth in associated industries, including dairy, horticulture, and agro-processing.

2.4 Enhancing Rural Demand

  • Increased agricultural productivity drives rural consumption and attracts investment in rural markets.
  • Leads to overall economic growth and poverty reduction.

2.5 Agriculture and Poverty Alleviation

  • As per the Situation Assessment Survey, 22% of Below Poverty Line (BPL) families are dependent on agriculture.
  • Targeted investment and policy support can help in reducing rural poverty.

 

3. Major Challenges in the Agriculture Sector

3.1 Climate Change & Extreme Weather Events

  • Climate change leads to erratic monsoons, droughts, and flooding, impacting crop yields.
  • Example: Kashmir saffron production declined from 8 metric tons over the past 12 years due to changing climate conditions.

3.2 Fragmented Land Holdings

  • 80% of Indian farmers operate on small and fragmented landholdings, reducing economies of scale.
  • Makes adoption of modern farming techniques difficult.

3.3 Lack of Mechanization & Modernization

  • India’s agriculture mechanization level is 40%, lower than China and the USA.
  • Women farmers lack access to modern tools and mechanization.

3.4 Price Fluctuation & Market Uncertainties

  • Farmers lack direct market access, leading to dependency on middlemen who offer low prices.

3.5 Informal Credit Dependence

  • 23% of farm loans are still taken from informal sources due to lack of banking access.

3.6 Limited Agricultural Extension & Research

  • Weak research and development efforts limit farmer access to new technologies and best practices.

 

4. Way Forward for Agricultural Growth

  • Climate-Resilient Farming: Adoption of drought-resistant crops, smart irrigation, and precision farming.
  • Technology Integration: Use of AI-based advisory services, drones, and digital marketplaces (e-NAM).
  • Strengthening MSP & Financial Support: Expanding crop insurance and procurement systems.
  • Sustainable Practices: Organic farming, crop rotation, and integrated pest management.
  • Public-Private Partnerships (PPP): Engaging private investment and technology firms in agriculture.

 

Source: https://pib.gov.in/PressReleasePage.aspx?PRID=2099696