Budget 2026 must address farmers’ demands post-farm laws repeal, boosting credit, modernising infrastructure, and ensuring MSP legal guarantees.

Budget 2026 Expectations: The agriculture industry is at a turning point as India gets closer to the Union Budget 2026–27, which is scheduled to be presented on February 1. It continues to be the backbone of the economy, employing almost half of the population and providing food security for 1.4 billion people, but it faces enduring issues like fragmented landholdings, water stress, post-harvest losses, and lagging farmer incomes. Political unrest has plagued the industry in recent years, especially when the three agricultural laws were introduced and later repealed in 2020–2021.

These rules, which sought to liberalize pricing, storage, and commerce, caused widespread protests in Punjab, Haryana, and Uttar Pradesh. Hundreds of thousands of farmers were drawn to the borders of Delhi in what turned out to be one of the longest-running agitations in contemporary India. Farmers’ fears of diminishing minimum support prices (MSP) and growing corporate power sparked protests that exposed long-standing concerns for more than a year.

In November 2021, Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP)-led administration finally suspended and repealed the legislation, marking a rare policy reversal in the face of political pressure in places like Uttar Pradesh.

This concession, however, did little to ease wider dissatisfaction; farmer sentiments are still negative, and continuous calls for debt relief and formal MSP guarantees continue to inspire periodic marches like those in 2024.

There are legitimate claims that the Modi administration has not been decisive in agriculture, putting industry and infrastructure ahead of ground-breaking farming reforms. Initiatives such as the Agriculture Infrastructure Fund (AIF), which was established in 2020 with loans totaling Rs 1 trillion, have not been implemented consistently, resulting in agricultural produce markets (APMCs) in poor condition and the suspension of futures trading since 2021, which has discouraged private investment.

Politically, this disregard might eventually drive away rural voters, a crucial BJP base, particularly as trade disputes and climate shocks increase the sector’s strategic significance on a global scale. The need for aggressive fiscal interventions is highlighted by the fact that agriculture’s anticipated 3.1% growth in 2025–2026 falls short of the overall 7% GDP projection.

A possibility to rebalance is presented by Budget 2026, which combines fiscal discipline and political economy by modernizing infrastructure, increasing credit, and coordinating policies with ecological and nutritional demands. However, with pre-Budget talks focusing on sustainable development, it remains to be seen if farmers will receive transformative help at last or if they will once more be marginalized in the name of “Viksit Bharat.”

Farmer unhappiness and the lingering effects of the farm laws

Although the agricultural laws’ repeal was a significant turning point, the conflict between farmers and the BJP government has not been resolved. Fears that the rules would undermine the MSP regime and expose smallholders to market volatility and corporate exploitation sparked protests.

Social media mood research and other post-repeal evaluations conducted in 2025 show conflicting opinions. While some saw it as a win for democratic mobilization, many farmers continue to be frustrated by unmet promises, such as MSP legal guarantees.

Expectations for fair deals are high in regions like Madhya Pradesh, the home state of Union Agriculture Minister Shivraj Singh Chouhan, yet rural hardship endures as incomes fall 40–50% short of non-farm wages.

Politically, the BJP has come under fire for its lack of vision. In an attempt to reduce inflation, Modi’s administration halted futures trading in 2021, but institutional analysis reveals no connection; instead, it hindered investments in infrastructure and private storage. In other areas, such as the infrastructure drive worth Rs 10-11 trillion, concrete initiatives stand in stark contrast to this indecision.

Pulses cultivation has decreased from 28.83 million hectares in 2020–21 to 26.5 million hectares in 2023–24 due to the sector’s economic distortions, which include an excessive emphasis on cereals through MSP and state bonuses. This has exacerbated nutritional imbalances, where carbohydrates make up 62–70% of caloric intake instead of the recommended 45–55%. In order to prevent a cycle of protests and policy reversals, Budget 2026 must address this by reviewing MSP regulations to encourage varied cropping.

Infrastructure Shortfalls and Structural Issues

Budget 2026 must address long-standing problems facing India’s agriculture. Productivity is hampered by fragmented holdings, inefficient use of water, and post-harvest losses, which are estimated to be 15-20% every year. The backbone of secondary trade, APMCs, is still antiquated; even national hubs like Azadpur and Vashi are not up to par with international standards and receive no direct Union assistance in spite of the AIF’s Rs 1 trillion credit program. The amount of rice produced has increased to 150 million tonnes in 2024–2025, but a large portion of it is used to make ethanol, which distorts markets and the environment.

From the perspective of political economy, farmers are at risk since the BJP prioritizes welfare over investment. In states like Chhattisgarh and Telangana, opposition parties like Congress provide paddy bonuses, which leads to imbalances in the country. Economically speaking, India’s inadequate food processing only handles 10% of output, compared to peers like Brazil that process 30%–70%, which restricts value addition and exports.

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Growth is further hampered by erratic export restrictions and expensive logistics brought on by subpar cold chains. Pre-budget discussions emphasize the need for outcome-linked subsidies rather than general inputs, which would incentivize the adoption of technology and water efficiency. Direct investments in updating two model APMCs and removing futures bans might draw private funding for Budget 2026, promoting resilience in the face of changes in international commerce, such as US tariffs on Indian exports.

In the absence of this, the industry runs the risk of falling behind in India’s growth narrative.

Important Fiscal and Policy Support Expectations

Budget 2026 is expected by stakeholders to transform agriculture from a welfare sector to a development engine. To increase rural demand and consumption, lending objectives have been raised by 15–20% to around Rs 36 lakh crore for agricultural and Rs 6 lakh crore for related industries like dairy and fisheries. This expands on NABARD’s forecast that it will surpass the Rs 32.5 lakh crore target for FY26, with 60% going towards short-term loans with 7% interest subsidized. To increase high-value exports, rice exporters look for tax incentives and organic promotion.

Politically, the Modi government may give priority to these in the context of coalition dynamics, given the scrutiny it faces from rural voters. Investments in cold chains, agri-logistics, and MSME clusters for food processing are economically essential for integrating with global chains, particularly when food turns into a strategic asset in trade disputes. Climate-secure measures, data-driven decision-making, and export programs for fisheries and processed foods—which have demonstrated flexibility by broadening markets following US tariffs—are among the calls for a single, cohesive strategy.

In order to stop the fall of pulses, experts advise against short-term populism and instead match MSP with nutritional needs. Pre-budget meetings with farmer groups emphasize sustainable growth. Budget 2026 could spur 4-5% sectoral growth and close the gap between urban and rural areas if it achieves these goals, possibly by creating a special fund for market reforms.

Implications for Political Economy and the Future

Agriculture funding in Budget 2026 will put the BJP’s dedication to rural India to the test, particularly in light of the backlash against post-farm policies. The repeal gave movements more confidence by showing that persistent protests may compel changes in policy, but it also runs the risk of undermining confidence if action is not taken. Farmer demands legal support for MSP in Madhya Pradesh and elsewhere, seeing the budget as a test of Modi’s ‘Viksit Bharat’. Any gap could be exploited by the opposition, such as the Indian National Congress, to increase calls for social expansions.

Due to its endurance in the face of global uncertainty, agriculture is positioned to generate foreign exchange through a variety of exports, including seafood, spices, and millets. However, India runs the danger of losing out on possibilities in a world with high tariffs if changes like clear futures policies and infrastructure enhancements are not implemented.

A balanced strategy will replace subsidies with incentives for efficiency, potentially saving Rs 1-2 lakh crore a year while increasing incomes by 20–30% through value addition. In the end, Budget 2026 must balance economic vision with political responsiveness to make sure agriculture drives inclusive prosperity, or else agricultural unrest will resurface during an election cycle.