From Subsidies to Systems

India’s Union Budget for 2026–27 sketches a quieter but more consequential overhaul of agricultural policy.

For much of independent India’s history, agricultural policy has been shaped by urgency. Droughts, price spikes and electoral cycles have encouraged governments to rely on input subsidies and ad hoc support, often at the expense of long-term productivity. The Union Budget for 2026–27 marks a departure from that habit. Rather than another incremental adjustment, it proposes a structural reset anchored in science, ecology and markets that is aimed at making Indian agriculture more resilient, more export-oriented and more humane.

What distinguishes this Budget is not any single announcement but the coherence of its approach. Farmer health, tree-based agriculture, agroforestry, natural farming, coastal production systems and agricultural exports are no longer treated as isolated policy silos. They are woven into a single strategy that recognises agriculture as an economic system rather than a welfare problem.

Nowhere is this clearer than in the renewed attention to plantation crops, especially cashew. Despite India being among the world’s largest producers and processors, cashew had effectively vanished from Union Budget discourse for decades. The 2026–27 Budget reverses that neglect with dedicated programmes for cashew and cocoa, orchard rejuvenation, improved nurseries, village-level processing hubs and quality certification. For Maharashtra and Goa - India’s principal cashew-growing states - this is more than symbolic. By linking production to processing, coastal employment and exports, the Budget treats plantation crops as engines of rural growth rather than peripheral commodities.

Central Pillar

Exports, more broadly, are a central pillar. India’s agricultural export potential has long been constrained not by volume but by infrastructure, compliance and fragmentation. The Budget’s emphasis on GI-based export clusters, modern testing and traceability systems, incentives for value-added products and simplified digital documentation addresses these bottlenecks directly. The aim is to move Indian agriculture up the value chain, away from bulk exports vulnerable to price swings and towards differentiated products capable of commanding premiums in global markets.

Coastal agriculture provides another example of joined-up thinking. Historically, farm policy and maritime infrastructure have existed in parallel worlds. The new Budget explicitly connects the two through coastal cold-chain corridors, port-linked processing hubs and integrated export logistics for crops such as cashew, coconut and fisheries. This alignment matters. For coastal farmers and small processors, proximity to ports can now translate into faster market access, reduced spoilage and higher realisations.

Equally significant is the emphasis on trees. Small and marginal farmers, facing shrinking landholdings and rising climate stress, are among the most vulnerable participants in the rural economy. The Budget’s support for agroforestry, orchard development and multi-layered cropping systems reflects growing evidence that perennial, tree-based agriculture offers both economic stability and ecological benefits. Such systems spread risk, improve soil health and generate income over longer cycles.

Although the Budget does not explicitly brand these measures as ‘natural farming,’ many of them align closely with its principles. Low-input perennial crops, biological soil management, on-farm biomass recycling and diversified cropping systems receive encouragement. The emphasis is less ideological than practical: reducing chemical dependence lowers costs, improves resilience and aligns Indian produce with the sustainability standards demanded by export markets.

Perhaps the most understated yet consequential shift lies in how the Budget treats farmers themselves. By allocating resources for occupational health assessments, preventive nutrition, rural mental health and safety protocols, it implicitly recognises farmer health as a form of economic capital. This is a notable departure from the traditional assumption that productivity is determined solely by inputs and prices. Healthier farmers are more productive, more adaptable and better able to withstand shocks - an insight long acknowledged in theory but rarely reflected in fiscal policy.

Taken together, these measures suggest a Budget shaped as much by evidence as by expediency. Research, field experience and state-level advisory inputs appear to have found unusual traction at the national level. The result is a policy framework that looks beyond the next season to the next decade.

None of this guarantees success. Implementation will matter more than intent, and coordination across ministries and states will test administrative capacity. Yet as a statement of direction, the 2026–27 Budget stands apart. It recognises that India’s agricultural future will not be secured by ever-larger subsidies, but by healthier farmers, smarter systems and deeper integration with global markets.

If sustained, this shift could redefine the political economy of Indian agriculture by making it less reactive, more strategic and better aligned with the country’s broader ambitions for growth, resilience and global relevance.

(The writer is a member of Maharashtra Agriculture Price Commission. Views personal.)