The central government led by Prime Minister Narendra Modi claims that its policies place farmers, women, youth, and the poor at the core. The Prime Minister repeatedly reiterates this priority and links it to the goal of achieving a developed India by 2047. However, it is also true that without rapid growth in the agricultural sector and a rise in farmers’ incomes, this dream cannot be realized. In this context, the government needs to recalibrate its policies in 2026 and move away from a consumer-centric approach toward prioritizing farmers’ interests.
The primary reason for this shift lies in adopting a more flexible stance on monetary policy and inflation targets. Food inflation has remained negative, while the policy commitment to keep retail inflation (CPI) around four percent, with a tolerance band of two percent on either side, has weakened farmers economically. The government must acknowledge this reality, as a change in policy orientation is impossible without such acceptance. While the government consistently claims that farmers’ income, rather than production, is now the central focus, decisions taken over the past few years do not reflect this shift. The sharp decline in prices of most agricultural commodities clearly indicates a fall in farmers’ earnings.
There are only two ways to increase farmers’ income: raising production while reducing costs, or ensuring higher prices for farm produce. The government has steadily increased the Minimum Support Prices (MSP) for 23 crops, but procurement at these prices remains limited to select crops and a few states. As a result, farmers continue to concentrate largely on foodgrain crops. This has led to record stocks of wheat and rice in the central pool, prompting the government to explore ways to reduce these inventories. However, exporting these stocks is not fully feasible, as World Trade Organization rules do not permit exports from public stocks procured through subsidies. This complex cycle has prevented the government from effectively encouraging agricultural diversification, which is possible only through incentive-based policies rather than subsidies.
On the other hand, a large portion of the central government’s agriculture budget is being spent through direct benefit transfers. The biggest share goes to the PM-Kisan income support scheme, followed by interest subvention, crop insurance subsidies, and support under the agriculture infrastructure fund. Whatever remains is largely absorbed by salaries and other revenue expenditures, leaving very limited resources for agricultural infrastructure development, capital investment, and research.
At the same time, the government is moving toward excluding ineligible beneficiaries from welfare schemes based on available data. As a result, non-eligible recipients are being removed from PM-Kisan, interest subsidy, and other schemes. The next step in this process could be a reduction in fertilizer subsidies.
In such a situation, while attention should be focused on the Union Budget to be presented on February 1, it is equally important to assess where the government stands in fulfilling the commitments made over the past two to three years.
Alongside this, several legal changes related to agriculture and farmers are expected in 2026. The first major step in this direction is the Seeds Bill 2025, which, once enacted, will replace the Seeds Act of 1966. This legislation will mark a significant legal and policy shift for Indian agriculture. Similar laws may also be introduced for pesticides and fertilizers. However, it is likely that the government will first gauge stakeholder responses to the Seeds Bill before moving forward.
Despite all these efforts, unless the government prioritizes farmers over consumers on the pricing front, farmers’ distress will not ease. With rising production of certain crops and indications of declining global food commodity prices, the government may be compelled to introduce concrete policy changes. At the same time, there is an urgent need to review the current status of several missions announced in the previous budget.