Agricultural techniques such as precision agriculture, regenerative and natural farming practices, crop diversification and drone-based services improve productivity and price realization. However, these gains remain uneven, especially for small and marginal farmers, who constitute nearly 86 percent of India’s agricultural households. Therefore, as the Union Budget 2026-2027 approaches, the focus must shift from incremental support to structural transformation, ensuring sustainable, resilient and inclusive growth.
From fragmentation to scale: production clusters
Indian agriculture continues to be limited by fragmented land ownership and weak market connections. A production cluster approach, supported by institutions such as farmer producer organizations (FPOs), offers a feasible path to overcome these structural challenges.
Clusters enable aggregation of products, collective purchasing of inputs, shared infrastructure and stronger bargaining power in markets. Budget 2026 should deepen support for Farmer Producer Organizations (FPOs), not only 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 information and post-harvest processing infrastructure. An additional opportunity lies in leveraging community institutions such as self-help groups (SHGs) and village organizations (VOs) promoted under the National Rural Livelihoods Mission (NRLM), which can anchor FPOs at the grassroots and ensure broader farmer participation. Linking clusters to region-specific crops, related livelihoods and agro-climatic suitability can significantly improve income stability and scale efficiency.
Enabling agro-entrepreneurs and the next generation of farmers
A crucial, but underutilized opportunity lies in encouraging agricultural entrepreneurs; rural women and youth who can provide services such as nursery management, soil testing, input supply, market linkages and digital advisory services.
Targeted budget support for farms, start-up incubation in rural areas, concessional financing and skills certification can transform agriculture into a viable economic opportunity rather than a livelihood activity. Agroentrepreneurs also act as local employment generators, strengthening rural economies and improving access to services for smallholders.
Access to water as a basis for agricultural resilience
No agricultural transformation is possible without assured access to water. Despite advances in irrigation and watershed programs, much of India’s agriculture remains rain-fed and vulnerable to climate variability.
Budget 2026 should prioritize targeted investments in water harvesting, groundwater recharge, micro-irrigation and solar-powered irrigation systems, especially in drought-prone and tribal regions. Strengthening community-led water management and enabling affordable credit for water and sanitation infrastructure can directly increase productivity, reduce risks, and stabilize agricultural incomes.
Scaling up natural and climate-resilient agriculture
As climate risks increase, promoting natural and regenerative agriculture has become essential. These practices reduce input costs, restore soil health, conserve water, and reduce farmers’ exposure to volatile chemical input markets.
Public investments should promote 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 programs for integrated impact
Prime Minister Dhan Dhanya Krishi Yojana, covering 100 low-productivity agricultural districts, provides an opportunity to operationalize convergence in crop diversification, irrigation, storage and institutional credit in a mission-oriented approach. Budget support should ensure that such schemes prioritize smallholder farmers, rain-fed regions and women-led collectives to maximize inclusive impact.
Expanding credit and financial inclusion to stimulate rural demand
Access to affordable and timely credit remains a cornerstone of agricultural growth. The target for agricultural credits should be increased by 15 to 20 percent, with more emphasis on related activities such as fishing, poultry, livestock and dairy, sectors that provide stable income streams for small farmers.
Strengthening Kisan Credit Cards (KCCs), expanding interest subsidies to smallholders and women farmers, and improving the last-mile delivery of institutional credit can significantly reduce dependence on informal lenders.
Unlocking value through post-harvest infrastructure
Post-harvest losses are estimated at 5 to 6 percent, mainly in fruits, vegetables and dairy products, and continue to undermine farmers’ incomes. Increased allocations for warehouses, cold chains, storage and processing units at farms are critical to reduce distress sales and price volatility.
These factors collectively contribute to the vision of Vikshit Bharat 2047, with the agriculture sector playing a pivotal role in achieving it.
(The author is Executive Director, PRADAN)
Published on January 24, 2026
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