Budget 2026: Infra, research focus, climate-smart agriculture can demand higher allocation

Kolkata: Agriculture is one of the most important pillars of the Indian economy. Apart from generating direct massive employment for the rural sectors, it underpins the growth of the economy through food processing industries. The agriculture sector contributed 18.2% of GDP (constant prices) and provided employment to about 50% of the workforce. Days away from the Union budget, there are hopes of higher spending in infrastructure, research and development and climate-smart farming. It should be noted that 2026 has been labelled as the International Year of Women Farmers.

Interestingly, climate-smart agriculture is a holistic approach that combines traditional knowledge and modern technology. It is designed to boosts food security by sustainably increasing productivity, adapting to climate change impacts like droughts and floods, and reducing agriculture's greenhouse gas emissions. Building resilient food systems is one of the priorities of this approach.

The agri and allied sector budget in FY25 stood at Rs 1.52 lakh crore and for FY26 stood at Rs 1.37 lakh crore. Allocations for MSP and input subsidy effectively push it to more than Rs 3.91 lakh crore. Analysts have also pointed out that the bulk of the expenditure is towards direct benefit transfer and subsidies.

Industry experts have said that continued support towards producer organisations and cooperatives will be one of the focus areas of the Budget. Digital agriculture is another one. "It is expected that the upcoming budget would be more rational with greater allocation towards direct infrastructure spend through PPP as well as investment subsidies, as to be more in sync with the practices in other more developed ecosystems such as in the USA and China,” Padmanand V, partner and agriculture industry leader, Grant Thornton Bharat, was quoted as saying.

Consultancy major EY has brought out pointed out the benefits of climate-smart agriculture. It has said that it could help the sector avoid significant losses in the next 15 years. "While addressing the immediate issues, such as MSP (Minimum Support Price) rationalization, the government can take the opportunity to leverage the MSP as a platform to promote climate-resilient farming,” EY said in its note.

"Almost 80% of the agricultural workforce comprises farmers with small land holdings, making it critical to address their most pressing challenges – income security, access to markets and credit, and the incentivization of modern farming techniques. At the same time, addressing sustainability and climate change priorities in the sector is also a core concern," consultancy major EY has mentioned in a pre-Budget note.

There is a need for considerable increase in investment spend in the budget as against the typical consumption oriented spend in terms of DBT (Direct Benefit Transfer), MSP support and subsidizing operational expenditure in the agri budget, the industry says.

"Research and development (high yielding and climate resilient varieties), infrastructure (production, storage and processing), digital agricultural solutions (ag stack and AgTech) and exports (quality and higher value capture) should be the key focus areas for the upcoming budget,” Shashi Kant Singh, partner—agriculture, food and agribusiness, PwC India, was quoted as saying.

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Down the years, inadequate storage and logistics have been challenges for the Indian agri sector. About 15% to 20% fruits and vegetables are supposed to perish due to inadequate storage facilities. The food supply chain too has challenges despite the schemes such as the National Food Security Act (2013), PM Garib Kalyan Anna Yojana, PM POSHAN and Antyodaya Anna Yojana declared in the past few years.

The government has a few continuing missions which are likely to receive continued attention: These are National Mission on Edible Oils–Oilseeds and Aatmanirbharta in Pulses Mission. "Budget 2026–27 must strengthen these efforts, especially because India still imports a significant share of its edible oil (India currently imports 60% of its edible oil requirement) and pulses. Improving domestic capacity is not just an economic goal; it is essential to enable long-term food security,” EY mentioned in its note.