The budget has given more priority to financial assistance than direct subsidies, ensuring that farmers receive tailored support based on crop-specific and regional needs rather than general subsidies. Targeted support for paddy farmers through digital advisory services and soil health monitoring has resulted in improved crop yields and market prices in Telangana. By enabling small and marginal farmers to access larger loan amounts, the increased KCC loan limit has reduced their dependence on unlicensed moneylenders who charge exorbitant interest rates. By encouraging farmers to use water-efficient and climate-smart farming techniques, the Dhan-Dhanya Krishi Yojana reduces risks associated with erratic monsoons and climate change.
India’s economy relies heavily on agriculture, but it faces structural problems such as market inefficiencies, fragmented land holdings, and limited access to credit. Initiatives such as the Pradhan Mantri Dhan Dhanya Krishi Yojana and an increase in the Kisan Credit Card (KCC) loan limit were included in the most recent budget to strengthen farmers’ financial stability. The degree of progress made in addressing inefficiencies in agricultural markets will depend on their performance. To ensure food security, this initiative seeks to improve agricultural productivity and climate resilience through sustainable farming practices and improved farming practices. States such as Maharashtra and Karnataka have seen increased productivity thanks to precision farming methods such as drip irrigation and AI-driven soil analysis implemented under comparable programs.
The loan limit has been increased from ₹3 lakh to ₹5 lakh, giving farmers more money to spend on fertilizers, seeds, and contemporary farm equipment. Higher loan limits have made it possible for small farmers in Punjab and Haryana to buy mechanized equipment, thereby increasing productivity and reducing dependence on manual labor. The budget targets 100 low-productivity districts and introduces region-specific measures to boost yield and profitability, including improved irrigation systems, high-yield seeds, and better storage infrastructure. By improving irrigation and soil management, a similar district-focused strategy in the Saurashtra region of Gujarat has resulted in a significant increase in cotton yield. The National Mission on High-Yield Seeds aims to enhance seed quality and reduce crop failures caused by erratic weather patterns and soil degradation. In recent years, Uttar Pradesh has reduced yield losses during sharp temperature changes by introducing climate-resilient wheat varieties.
The budget has given greater priority to financial assistance than direct subsidies, ensuring that farmers receive tailored support based on crop-specific and regional needs rather than general subsidies. Targeted support for paddy farmers through digital advisory services and soil health monitoring has resulted in improved crop yields and market prices in Telangana. A focus on improved irrigation and high-yielding seeds will increase production per acre, boost farmers’ incomes, and enhance national food security. Under a comparable program, Madhya Pradesh adopted hybrid maize varieties, leading to increased production over three years. By enabling small and marginal farmers to access larger loan amounts, the increased KCC loan limit has reduced their dependence on unlicensed moneylenders who charge exorbitant interest rates. By encouraging farmers to use water-efficient and climate-smart farming techniques, the Dhan-Dhanya Krishi Yojana reduces risks associated with erratic monsoons and climate change.
Despite a decline in rainfall, farmers in Rajasthan have been able to maintain production by promoting drought-resistant millet varieties. Better infrastructure and easy access to credit allow farmers to invest in cutting-edge technology, which reduces post-harvest losses and boosts market prices. Emphasis on improving credit and implementing focused interventions in financially distressed districts will reduce financial hardship and reduce the number of farmer suicides due to debt burden. A debt restructuring program in Vidarbha, Maharashtra, helped farmers stabilize their incomes, ultimately resulting in a reduction in cases of debt-related distress. Increased KCC loan limits have provided farmers with greater financial flexibility, reducing their dependence on informal moneylenders. For small and marginal farmers, who account for about 86% of India’s agricultural population, official credit can be difficult to access.
They can use this measure to finance investments in high-quality machinery and seeds.
The Dhan-Dhanya Krishi Yojana encourages climate-resilient farming and high-yield seeds, which are essential for maintaining food security in the face of climate change. Availability of drought-resistant and high-yield seeds can stabilize production in states like Punjab and Haryana, where unpredictable monsoons affect yields. Reducing unnecessary expenditure and promoting more effective resource allocation is the goal of focusing on targeted credit support rather than general subsidies. Unlike excessive fertilizer subsidies, which distort input markets, direct cash transfers under PM-KISAN have enhanced farmers’ income security. With more credit available, farmers can purchase irrigation systems, storage facilities, and modern equipment, which reduces post-harvest losses and increases production. By empowering marginal farmers, increased financial support makes it possible for them to adopt sustainable farming practices and better technologies.
The Millet Mission in Odisha, which helps small farmers grow millets, is an example of how targeted credit can increase production of crops resilient to climate change. Farmers lack a guaranteed pricing mechanism, leaving them vulnerable to market fluctuations, even as credit availability improves. In 2023, tomato farmers in Karnataka lost a lot of money despite producing a bumper crop because prices fell due to excess supply. Inefficient supply chains and marketing in agriculture, which lead to farmers getting low prices for their produce, cannot be fixed with credit support alone. Increasing credit limits without enhancing income diversification risks trapping farmers in a debt cycle, especially in areas vulnerable to climate shocks. Due to erratic monsoons, farmers in Vidarbha have difficulty repaying short-term loans for inputs, increasing their debt.
Policies do not address India’s low agricultural exports (2-3% of global agricultural trade), which restricts farmers’ access to international markets and premium prices. Although India produces the most millets, farmers find it difficult to sell their produce abroad at competitive prices in the absence of strong export regulations. Farmers can increase their production by taking more credit, but they still face post-harvest losses in the absence of processing and storage facilities. To improve farmers’ price realization, the government should encourage contract farming and increase MSP coverage. Cooperative farming and guaranteed pricing can increase farmers’ incomes, as shown by the success of AMUL’s dairy model in Gujarat. Investing in cold storage, warehousing, and food processing facilities can stabilize prices and reduce post-harvest losses. The mango cold storage network in Maharashtra has helped growers increase the shelf life of produce and get higher prices in export markets.
To reduce dependence on water-intensive crops, farmers should be encouraged to cultivate high-value, climate-friendly crops. Telangana’s efforts to promote oilseed cultivation have helped farmers move from water-intensive paddy to more environmentally friendly options. Policies should aim to increase agricultural exports by enhancing market access and quality standards. Using digital land records, AI-powered precision farming, and real-time price discovery tools can help reduce inefficiencies in the agricultural value chain. The electronic National Agriculture Market, or e-NAM, has facilitated farmers’ access to better prices by bringing them directly into contact with Indian buyers. Strengthening the agriculture sector requires a focus on financial inclusion, market access, and technology integration. While initiatives such as the Pradhan Mantri Dhan Dhanya Krishi Yojana and increased KCC limits may provide short-term relief, tackling structural market issues will require a more comprehensive strategy that includes sustainable agricultural practices and better infrastructure.