Finance Minister has bypassed large parts of farm sector, Pg12

Key Highlights:

• India's agricultural sector is projected to grow at 3.1% in FY26, a decrease from 4.6% in FY25, while overall GDP is expected to grow at 7.4%.
• The Ministry of Agriculture and Farmers’ Welfare (MoAFW) will receive Rs 1.4 lakh crore in FY27, a 5.4% increase from Rs 1.33 lakh crore in FY26.
• The majority of support for the rural sector, totaling Rs 6.7 lakh crore, is allocated to welfare measures and subsidies.
• Food subsidy is estimated at Rs 2.27 lakh crore, while the fertiliser subsidy is pegged at Rs 1.7 lakh crore.

Detailed Insights:

• The Union Budget's approach to the agricultural sector continues to prioritize subsidies over developmental expenditures, despite the sector employing 45% of the workforce and contributing 17% to the GDP.
• While the allocation to the Ministry of Fisheries, Animal Husbandry, and Dairying increased by 26.7%, the Department of Agricultural Research and Education saw a 3% decrease.
• Excessive use of nitrogenous fertilisers is encouraged by input-linked and price-based fertiliser subsidies, which discourages balanced nutrient application.
• Redirecting subsidies into targeted transfers, research and extension, and region-specific ecological recovery can sustain farmer incomes and make agriculture more productive and resilient.
• Despite a significant reduction in poverty, the food subsidy remains dominant at Rs 2.27 lakh crore, indicating irrationality in allocating budgetary resources.
• Investing in agricultural research and development can lift more people out of poverty compared to spending on fertiliser subsidies.
• Climate change, groundwater stress, declining soil quality, and biodiversity loss make the current model of prioritizing subsidies unsustainable.

Key Concepts Involved:

• GDP (Gross Domestic Product): The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
• Fertiliser Subsidy: Government financial assistance to reduce the cost of fertilisers for farmers.
• Agricultural Research and Development (R&D): Systematic investigation or experimentation involving the agricultural sector to discover and revise knowledge of products or processes.