Union Budget 2026–27 Agriculture: Sector Seeks Higher Investment and Climate-Smart Reforms

With the Union Budget 2026–27 approaching, the agriculture sector in India is strongly advocating for higher investment-driven spending, especially in infrastructure development, research and development (R&D), and climate-smart farming practices.

Industry experts and stakeholders are optimistic that the upcoming budget will continue supporting farmer aggregation models such as Farmer Producer Organisations (FPOs) and cooperatives. There is also growing expectation around the promotion of digital agriculture, along with increased capital expenditure through Public-Private Partnerships (PPPs) for farm mechanisation.

According to Padmanand V, Partner and Agriculture Industry Leader at Grant Thornton Bharat, the Union Budget 2026–27 is expected to be more rational and investment-oriented.

“The upcoming budget should focus on direct infrastructure spending through PPPs and investment subsidies, aligning India’s agricultural ecosystem with global best practices seen in countries like the USA and China,” he said.

Climate-Smart Agriculture a Priority

Consulting firm EY has highlighted that without large-scale adoption of climate-smart agriculture, India’s agriculture sector could face substantial losses over the next 15 years.

“Along with addressing immediate challenges such as MSP rationalisation, the government can use MSP as a tool to promote climate-resilient farming practices,” EY noted.

Experts Call for Shift from Subsidies to Investments

Industry stakeholders emphasize the need for a significant increase in investment-led spending, rather than a heavy focus on consumption-oriented expenditure like Direct Benefit Transfers (DBT), MSP support, and operational subsidies.

Shashi Kant Singh, Partner – Agriculture, Food and Agribusiness at PwC India, said the key focus areas for Budget 2026–27 should include:

• Research and development of high-yielding and climate-resilient crop varieties
• Agricultural infrastructure such as storage, processing, and logistics
• Digital agriculture solutions, including AgTech and Ag Stack
• Export promotion for higher value realisation

Experts also believe the budget should maintain continuity in structural agricultural reforms while strengthening income support for farmers.

Long-Term Sustainability and Women Farmers

In the medium to long term, expectations include policy announcements related to:

• Reduction in greenhouse gas (GHG) emissions
• Improvement in soil health
• Enhancing crop yield and productivity
• Positioning India as a global food supplier

According to the Council on Energy, Environment and Water (CEEW), scaling natural farming requires stronger farmer institutions and improved extension services.

With 2026 declared as the International Year of Women Farmers, experts believe the Union Budget presents a unique opportunity to empower women farmers.
Apoorve Khandelwal, Fellow at CEEW, noted that investing in women-led institutions and enterprises can significantly accelerate the adoption of natural farming practices.

The agriculture sector also expects the second phase of the National Mission on Natural Farming to be more ambitious.

Key Challenges Facing Indian Agriculture

Despite strong foodgrain production, India continues to lose 15–20% of fruits and vegetables due to inadequate storage and logistics infrastructure.

Although food security has improved through schemes such as:

• National Food Security Act (2013)
• PM Garib Kalyan Anna Yojana
• PM POSHAN
• Antyodaya Anna Yojana

the food supply chain still faces structural challenges.

EY points out that climate risks, dependence on edible oil and pulse imports, and persistent child malnutrition indicate the urgent need for deeper agricultural reforms.

Past Budget Trends and Spending Patterns

The agriculture and allied sector budget stood at:

• ₹1.52 lakh crore in FY25
• ₹1.37 lakh crore in FY26

However, when MSP and input subsidies are included, total spending exceeded ₹3.91 lakh crore.

Padmanand V noted that:

“Most of the budget allocation continues to go towards DBT and subsidies, while spending on farm mechanisation and infrastructure remains limited to around ₹30,000 crore.”

Focus on Self-Reliance: Oilseeds and Pulses

Government initiatives such as the National Mission on Edible Oils–Oilseeds (NMEO-Oilseeds) and the Aatmanirbharta in Pulses Mission underline India’s push towards self-reliance.

• NMEO-Oilseeds, with an outlay of ₹10,103 crore till 2030–31, aims to increase oilseed production from 39 million tonnes to nearly 70 million tonnes, including bringing 40 lakh hectares of rice-fallow land under oilseeds.
• The Pulses Mission, supported by ₹1,000 crore, targets self-sufficiency by 2027 through certified seed distribution and free seed kits.

EY emphasised that strengthening these initiatives is critical, especially as India currently imports nearly 60% of its edible oil requirements.

Agriculture’s Role in the Indian Economy

The agriculture sector contributes approximately 18.2% of India’s GDP (at constant prices) and provides employment to nearly half of the country’s workforce.

Experts agree that Union Budget 2026–27 must prioritise investment-led growth, climate resilience, and structural reforms to ensure long-term food security and sustainable agricultural development in India.