Current Policy Interventions in India’s Agriculture Sector

Agriculture is far more than a livelihood for the millions of families who depend on it – it is the foundation on which India’s food security, rural employment, and macroeconomic stability rest. Yet the sector faces a compounding set of challenges: fragmented landholdings, erratic monsoons, water depletion, and persistently low farm incomes. Addressing these challenges requires not just ad-hoc fixes but a coherent, forward-looking policy framework. The Indian government has responded with a suite of targeted interventions designed to boost productivity, improve farmer welfare, integrate technology, and build long-term resilience across the agricultural value chain.

Why policy intervention in agriculture is non-negotiable 🔗

Agriculture’s role in the Indian economy goes well beyond its share of GDP. It employs over 40% of the population and its growth creates ripple effects across manufacturing, services, and rural consumption. When farming falters, the impact is not confined to the village – it reverberates through the national economy.

The structural challenges are well documented. 86% of India’s farmers are small and marginal, with an average holding of just 0.6 hectares, which limits their ability to access credit, technology, and markets. Only about one-third of India’s cropland is irrigated, leaving a vast majority of farmers dependent on monsoon rains that are increasingly erratic. Soil health is declining due to decades of over-reliance on chemical inputs, and groundwater levels in key agricultural states are falling at alarming rates.

Beyond the farm, India still has around 195 million undernourished people, representing roughly 25% of the global hunger burden. This makes agricultural policy inseparable from nutrition security, public health, and poverty alleviation. Without deliberate, well-funded interventions, the sector cannot deliver on any of these fronts.

Income support and price stabilization 🔗

A farmer who cannot earn a stable income will not invest in better seeds, irrigation, or practices. Income stabilization has therefore been central to India’s agricultural policy architecture.

Minimum Support Price (MSP) 🔗

The MSP mechanism guarantees farmers a floor price for their produce, protecting them from distress sales when market prices fall. The government has fixed MSP at a return of at least 50% over the weighted average cost of production from 2018-19 onward. In 2024, MSPs were raised substantially across both kharif and rabi seasons – wheat prices rose by 6.6%, maize by 6.5%, and pigeon peas by 8%, reflecting the government’s intent to make farming remunerative. The government has also enhanced its procurement guarantee for pulses, oilseeds, and copra to ₹45,000 crore, ensuring farmers have a reliable buyer at MSP when open market prices dip.

PM-KISAN: Direct income transfer 🔗

Launched in 2019, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme provides ₹6,000 per year directly to farmers’ bank accounts in three equal instalments. It is one of the largest direct benefit transfer programmes in the world. As of August 2025, ₹3.90 lakh crore had been transferred to more than 11 crore farmers across 20 instalments. The scheme bypasses intermediaries entirely, reducing leakages and ensuring the money reaches those who need it most.

Crop insurance and credit access 🔗

Even with MSP and direct transfers, a single bad harvest can wipe out a family’s savings. Risk mitigation through insurance and accessible credit is therefore a critical pillar of agricultural policy.

Pradhan Mantri Fasal Bima Yojana (PMFBY) 🔗

Launched in 2016, PMFBY provides comprehensive crop insurance against natural calamities. Claims worth over ₹1.70 lakh crore have been paid out since the scheme’s inception. A significant upgrade came with DigiClaim, introduced in Kharif 2023, which ensures payments are transferred directly to farmers through the National Crop Insurance Portal, eliminating delays and manual errors. The scheme was extended through 2025-26, with participation by non-loanee farmers rising steadily – a sign that farmer confidence in the scheme is growing.

Kisan Credit Card (KCC) and institutional credit 🔗

Access to affordable formal credit is essential for farmers to invest in inputs and technology without turning to moneylenders. Cumulative agricultural credit through the Kisan Credit Card scheme has exceeded ₹10 lakh crore, reaching 7.71 crore farmers. The 2025-26 Union Budget further proposed raising the subsidised farm loan limit from ₹3 lakh to ₹5 lakh per farmer, ensuring that credit remains accessible even as input costs rise.

Water management and irrigation policy 🔗

Water scarcity is one of the most serious threats to India’s agricultural future. Groundwater depletion and persistent drought can have grave consequences for future food production, particularly in states like Punjab, Haryana, Maharashtra, and Rajasthan. Policy has responded on multiple fronts.

The Pradhan Mantri Krishi Sinchai Yojana (PMKSY) operates under the guiding principle of “Har Khet Ko Pani” (water to every farm), with a focus on expanding irrigation coverage and improving water-use efficiency. Within PMKSY, the Per Drop More Crop scheme promotes micro-irrigation technologies – drip and sprinkler systems – that significantly reduce water consumption while maintaining or improving yields. Making farmers aware of and trained in better techniques such as drip irrigation, organic farming, and rainwater harvesting is increasingly recognized as vital for sustainable agriculture in water-stressed regions.

Beyond micro-irrigation, the policy framework also calls for interstate cooperation in water management and the accelerated completion of long-pending irrigation projects to reduce dependence on unpredictable monsoon patterns.

Digital agriculture and technology integration 🔗

Technology has emerged as a major policy lever to address several challenges simultaneously – from improving market transparency to enabling precision farming.

Digital Agriculture Mission 🔗

The Digital Agriculture Mission was approved on 2nd September 2024 with an outlay of ₹2,817 crore, aimed at building a Digital Public Infrastructure (DPI) for the sector. A cornerstone of this mission is the creation of a Farmer ID – a digital identity for every farmer similar to Aadhaar – with the goal of covering 11 crore farmers by 2026-27. This will allow the government to deliver services, subsidies, and advisory support directly and accurately. The mission also involves mobile-based digital crop surveys, satellite monitoring, and AI-driven advisory tools that help farmers make better decisions on inputs, irrigation, and pest management.

Electronic National Agriculture Market (e-NAM) 🔗

The e-NAM platform integrates Agricultural Produce Market Committees (APMCs) across the country into a unified digital marketplace, enabling farmers to sell their produce at competitive prices and reducing the dominance of intermediaries. As of December 2024, 1,410 mandis across 23 states and 4 Union Territories had been integrated, with 1.78 crore farmers and 2.63 lakh traders registered on the platform.

Sustainability, natural farming, and soil health 🔗

Agricultural growth that depletes natural resources is not sustainable. The current policy framework explicitly recognises this by promoting ecologically sound farming practices.

The National Mission on Natural Farming (NMNF), approved in November 2024 with an outlay of ₹2,481 crore, promotes chemical-free farming using locally available biological inputs. Complementing this, the Soil Health Card Scheme provides farmers with personalised soil testing reports guiding them toward balanced, targeted fertilizer use rather than blanket chemical application. The Paramparagat Krishi Vikas Yojana (PKVY) supports organic farming clusters with financial and technical assistance, creating linkages to markets that reward chemical-free produce with premium pricing.

India’s Union Budget 2025-26 has placed agriculture as the foremost engine of development, with explicit policy directions around self-sufficiency in food production, sustainable practices, digitalisation, infrastructure, rural financial inclusion, and agri-food export promotion. The target is to increase grain production by 50 million tonnes by 2030, alongside a deliberate push to diversify into horticulture, pulses, and oilseeds to reduce the risks associated with over-dependence on a narrow crop base.

Market access, infrastructure, and farmer collectives 🔗

Producing more is only half the battle – farmers must also be able to sell at fair prices and with reduced losses. Infrastructure and collective bargaining are therefore essential policy concerns.

The Agriculture Infrastructure Fund (AIF), backed by a ₹1 lakh crore allocation, supports post-harvest infrastructure such as warehouses, cold storage units, and processing centres. Since 2020, the AIF has sanctioned ₹51,364 crore for 84,159 projects, including custom hiring centres and primary processing units. The fund’s scope was expanded in 2024 to include community farming assets and renewable energy integration through PM-KUSUM.

Farmer Producer Organizations (FPOs) are central to the market access strategy. FPOs allow small farmers to pool resources, engage in collective bargaining, and access markets that would be out of reach individually. A central sector scheme budgeted at ₹6,865 crore supports the formation of 10,000 FPOs, with 9,180 already registered. FPOs are particularly effective for small and marginal farmers who cannot negotiate fair prices on their own.

The macroeconomic imperative: connecting farm to economy 🔗

Agricultural policy does not operate in isolation. A productive, stable agricultural sector creates demand for manufactured goods – fertilizers, machinery, packaging – and generates rural incomes that fuel consumption across sectors. Economic growth in non-farming sectors such as services and manufacturing can help sustain incomes of farming households affected by water scarcity – and vice versa. This interconnection means that agricultural policy must be designed not just to serve farmers but to catalyse broader rural economic development.

Food inflation is a persistent concern that directly affects macroeconomic stability. Food inflation surged beyond 10% in October 2024 before easing, though the decade-long average remains over 6%, pointing to systemic supply-side constraints that policy must address through better storage, logistics, and production diversification. The inherent tension between keeping food prices low for consumers while ensuring remunerative prices for producers remains one of the central challenges in Indian agricultural policy – one that cannot be resolved through price controls alone, but requires structural improvements in productivity and supply chains.

Gaps and the road ahead 🔗

Despite the scale and ambition of current interventions, significant gaps remain. There is no sufficiently strong mechanism to bring state and central level policy-makers together to discuss problems, design solutions, and monitor performance – a coordination deficit that leads to fragmentation and duplication. Export restrictions, when applied reactively to manage food inflation, have implicitly taxed farmers by depressing the prices they receive, even as subsidies attempt to compensate. A more predictable and transparent trade policy framework is needed.

An integrated policy framework that aligns agriculture with nutrition, health, and water governance across multiple ministries is essential to ensure that higher production actually translates into better food and nutritional outcomes for the population. The policy direction is clear; the challenge is execution at scale, with consistency and coordination.

What do you think? With India’s agricultural policy increasingly emphasizing digital tools and market integration, do small and marginal farmers – who make up 86% of the farming population – have adequate support to benefit from these interventions? And given the dual pressure of ensuring fair prices for farmers while keeping food affordable for consumers, what trade-offs should policymakers prioritize?

References

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