There are a plethora of challenges, including fragmented land ownership (almost 85 percent of farmers are small and marginal farmers), leading to low production scale, low productivity and inadequate infrastructure. These in turn cause significant post-harvest losses, market access problems, price realization problems and volatility, which affect farmers’ incomes. These are increasingly exacerbated by external shocks such as climate change, extreme weather events and global events that sometimes impact domestic supply chains. The past few Budgets have attempted to address some of these issues through a pragmatic mix of tactical measures and forward-looking initiatives aimed at addressing some of these structural inefficiencies. However, given the severity of these issues and the enormous potential of the sector that could be unlocked, there is a need for a decisive shift towards long-term interventions that increase resilience while unlocking value in the agricultural and related ecosystem.
Focus on climate
The first major expectation of Budget 2026 will be a sharper focus on climate adaptation and risk mitigation. The budget can allocate greater public investments in climate-resilient agriculture, including drought-tolerant seeds, water-efficient cropping systems, regenerative agriculture and region-specific agronomic practices. The budget may consider launching the “Climate Smart Districts Programme” under which 200-250 districts can be converted into climate smart farming zones with bundled interventions such as climate resilient seeds, micro-irrigation, solar pumps, soil health restoration, etc., which can also be integrated with the district irrigation plans and state climate change action plans. Moreover, strengthening agricultural research and extension systems, especially through climate-smart technologies and data-driven advisories, should be given greater priority with increased expenditure, which can in turn help farmers make informed decisions and improve their productivity and income. Crop insurance schemes could be rethought, with a focus on improving coverage, transparency and timely payouts, better protecting farmers from climate-induced losses.
The second major expectation will be initiatives aimed at prioritizing crop diversification. Indian production patterns continue to trend towards water-intensive grains, driven by historical purchasing policies and price incentives. While these have played a role in ensuring food security, they have also led to ecological stress and limited income growth. Budget 2026 can accelerate a transition to high-value crops such as pulses, oilseeds, fruits, vegetables and millets by aligning minimum support prices, procurement mechanisms and post-harvest infrastructure with diversification objectives.
More importantly, dietary patterns indicate an increasing shift towards protein needs. Although consumption and availability of protein have increased, there are concerns about the quality required and its distribution, highlighting the need for food and crop diversification. Promoting food grains and horticulture will not only improve nutritional outcomes but also increase agricultural incomes.
Another chance
Third, the related sectors (livestock, dairy, fishing and forestry) offer another opportunity. These sectors are more resilient to climate change and generate higher and more stable incomes, especially for small and marginal farmers. While previous budgets have emphasized on these segments, the upcoming budget may focus on targeted steps for improvement, animal health infrastructure, cold chains and value-added processing, which can significantly improve productivity and profitability. Cluster-based processing zones for fruits, vegetables, dairy, fish and spices can be promoted using the Pradhan Mantri Formalization of Micro Food Processing Enterprises Scheme (PMFME) and Pradhan Mantri Krishi Sinchayee Yojana (PMKSY). The adoption of plug-and-play infrastructure (sorting, grading, IQF, packing) operated by private players under a PPP rental model can be encouraged. This can result in value addition at farm level, a reduction in logistics costs and a boost to processing and export levels.
Another important area for the budget to focus on is market reforms and value chain integration. Despite recent reforms, farmers still face price volatility and limited bargaining power. The focus could be on strengthening FPOs. The budget may provide for the launch of ‘One FPO – One Market Linked Product Programme’ – wherein a single high-demand product (e.g. onions, tomatoes, milk, fish seed, turmeric) can be allocated to each FPO and held for a specified period. Considering that a significant amount of horticultural produce is also traded in APMC Mandis, the budget can as well be spent on developing some world-class APMCs, which can be a model for the rest of the country.
Consider these initiatives
Fifth, technology adoption will be a crucial factor in this transformation. While the government has taken initiatives to strengthen the unified digital agriculture ecosystem (Agri Stack) to enable transparent pricing, direct procurement, land registration, extension services, input subsidies, better implementation of welfare measures, etc., here are a few initiatives that the upcoming budget may consider to accelerate adoption:
· Introduction of targeted digital equipment subsidies covering 30 to 40 percent of the costs for instruments such as soil sensors, drones-as-a-service, micro-irrigation controllers, etc., routed through FPOs to ensure collective use and reduce individual costs.
· Launch of ‘Digital Farm Services Vouchers’ to give farmers access to advisory apps, satellite-based crop insights and AI-driven pest alerts at subsidized rates – similar to fertilizer or seed subsidies, but for agritech services.
· Promoting shared technology centers at panchayat level, equipped with drones, IoT kits, portable testing equipment, managed by trained rural youth or FPOs on a pay-per-use model.
· Improved budgetary allocations to support agri-tech start-ups, public-private partnerships and strengthening digital last-mile infrastructure could be a welcome step to accelerate technology diffusion across the business scale.
Finally, addressing rural incomes requires a move beyond production-oriented policies and a broader vision of rural development. Skills development, rural, non-farm employment and agricultural enterprises must be part of a holistic strategy. Linking agriculture with food processing, bioenergy and rural production can create employment and absorb surplus labor, relieving pressure on agricultural incomes.
In essence, Budget 2026 offers an opportunity to move from short-term relief measures to a coherent, future-proof agricultural strategy. By prioritizing the above measures, the government can put agriculture and related sectors on a more sustainable and income-raising path. Such a recalibration is not only desirable, but also essential for guaranteeing food security, nutrition, rural prosperity and macroeconomic stability in the coming years.
(The author is Partner, Food and Agribusiness, Business Advisory, BDO India. Opinions are personal)
Published on January 24, 2026
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