The presentation of the agriculture budget in India, probably on February 1, 2025 will mainly focus on rural income.

Analysts expect Nirmala Sitharaman, the Union Finance minister to focus on easy credit access to rural income earners. 

58% Rural Portion of Urban Spending

According to a preview on Economic Times, the majority rural population of India manages only 58% proportion of urban spending.

So, the focus of the 2025 agricultural budget could target reducing this gap by raising farmers’ income vis-á-vis urbanites.

India’s budget vs. livelihoods

The spending gap is a slander on agriculture, which in turn is the backbone of the rural population.  As of 2001, around 70% of India’s population lived in the rural areas and 70% of this percentage had a farming livelihood.

Today, agriculture employs 45% of all people in India, but the sector only contributes 18% in value addition to the economy.

It all boils down to low agricultural productivity, which is just 12.2% of that in more advanced nations. 

Farming labor productivity in India also underperforms in the gauge of the country’s income group. Local productivity is only 43% of productivity in similar emerging economies.

Raising Income

Other than productivity, the budget could also focus on agricultural income, currently susceptible to farm size and weather issues.

Regarding farms, the government could increase land consolidation to increase small family plots and boost production.

Weather-wise, 50% of India’s agriculture relies on the Monsoon rains, a reliance that stokes production swings. The budget could address this factor by boosting income chances even outside monsoon months by financing irrigation schemes. 

Start up agri-businesses

Another possible beneficiaries of the 2025 agriculture budget are small agri-businesses and manual sectors.

These sectors have been struggling in tandem with the slow down of the subcontinental economy and might attract financial respite.  Some of the pinpoint entities that could get access to funds include micro-businesses and SMES.

Thus, the Union agriculture budget in India for 2025 will likely target boosting rural income and household spending. This way it could directly or indirectly back the main economic activity here, namely farming. In recent years, this significant sector has seen a tripling of its budget, as the statistics below indicate.

Statistics on Agriculture Budget in India

In the past decade, beginning 2012, India’s agricultural budget has grown more than three times. However, agriculture has been receiving a low portion of the total cross-industry budget. For instance,  the 2013-14 fiscal year received 1.3% while the 2017-18 period got 2% of the total budget. 

Have allocations been increasing? 

In the 2017-18 period, the total budget was 576 billion rupees ($6.647 billion) or 3 times that of the 2012-14 equivalent. Between 2014 and 2023, the budget would grow five-fold.  By the 2023-24 budget, the agricultural portion had increased to 1.27 trillion rupees ($14.7 billion). The 2024-25 budget in its part rose by 4.58% year-on-year to 1.32 billion ($15.2 billion) rupees.

How big is agricultural contribution to India’s economy?

Agriculture represents 18% of the Gross Domestic Product of India. However, it is the main economic activity of the 69% of India’s population living in rural areas.

Does the budget support rural development? 

The first significant budgetary allocation for rural development (RD) was in 2013.  That year, RD allocation improved by 46% while total agricultural budget rose by 22%. In the 2024-25 budget, agricultural allocation increased by 4.58% from the previous year’s total.