Union Budget 2025: Agriculture key to development
Village Square breaks down the policies announced as a part of the Union Budget 2025 that are likely to impact rural India the most.
India’s Finance Minister Nirmala Sitharaman identified four engines of growth – agriculture, MSME (micro small and medium enterprises), investment and exports – while outlining the 2025 Union Budget in parliament on February 1. These will have a direct impact on the country’s rural sector, given the agricultural reforms Sitharaman also proposed as a part of the budget.
Though the thrust of the budget is to invigorate the private sector and uplift household sentiments, especially in the country’s burgeoning urban middle class, themes like sabka vikas (development for everyone), viksit Bharat (prosperous India) and development measures spanning areas like garibi (poverty), youth, annadata (food provider) and nari (women) were prevalent in the budget and point to a more inclusive growth story.
Here is a breakdown of the budget highlights that are likely to have the biggest impact on rural India.
Agriculture, the first engine of development
The success of the Aspirational Districts Programme has motivated the government to undertake the ‘Prime Minister Dhan Dhaanya Krishi Yojana’, in partnership with the states. Described by many as a transformative initiative aimed at improving the agriculture sector, this programme will cover 100 districts plagued by low productivity, moderate crop intensity and below-average credit parameters.
It aims to help farmers adopt crop diversification and sustainable agricultural practices, while augmenting post-harvest storage, improving irrigation facilities and facilitating the availability of long-term and short-term credit. It is estimated that this programme will impact 1.7 crore families.
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Multi-sectoral rural prosperity and resilience programme
This programme will be launched in partnership with the states and address under-employment in agriculture through skilling, investment, technology, and invigorating the rural economy. The idea is to generate more opportunities in rural areas so that migration rates come down. The programme will focus on rural women, young farmers, rural youth, marginal and small farmers, and landless families.
Technical and financial assistance from development banks
Development banks will continue to be tapped with global and domestic best practices incorporated along with technical and financial assistance sought from multilateral development banks. In the first phase, 100 developing agri-districts will be covered.
Mission for cotton productivity
A five-year mission for cotton productivity will enable higher productivity and sustainable cotton farming. Science and technology support will also be given to farmers. Aligned with an integrated 5F vision for the textile sector, farmers stand to benefit with an increase in income.
Kisan credit cards (KCC)
These cards will facilitate short-term loans for 7.7 crore farmers, fishermen and dairy farmers. The Modified Interest Subvention Scheme will be enhanced from Rs 3 lakh to Rs 5 lakh for loans taken through the KCC.
Self-reliance in oilseed production
Currently India imports more than 50 percent of its edible oil needs each year. To help make India more self-reliant, the government will be implementing the National Mission for Edible Oilseed, pumping some Rs 10,000 crore to help increase the production of oilseeds.
Mission for Atmanirbharta (self-reliance) in pulses
This will be a six-year mission with a focus on pulses like Tur, Urad and Masoor. Agencies like NAFED and NCCF will procure these pulses from farmers who register with them.
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Makhana board to be set-up in Bihar
The board will help improve the production, processing, value addition and marketing of makhana (foxnuts). Those involved in these activities will be organised into FPOs (farmer producer organisations). Handholding and training will be provided to makhana farmers by the board.
Mission on high-yielding seeds
A national mission on high-yielding seeds aims to strengthen the research ecosystem, targeted development, pest resistance, climate resilience and commercial availability of over 100 seed varieties released from July 2024.
Enabling framework for sustainable harnessing of fisheries
India is ranked number two globally in fish production and aquaculture. To tap this potential further the government will bring in an enabling framework for the sustainable harnessing of fisheries, with a special focus on Andaman and Nicobar and Lakshadweep islands.
India Post reforms
India Post shall be transformed into a large public logistics organisation, meeting the needs of new entrepreneurs, women, self-help groups and MSMEs. The 1.5 lakh rural post offices will be repositioned to act as a catalyst for the rural economy.
No boost to MGNREGA
The budget of the Union Rural Development Ministry has been increased by approximately Rs 14000 crore, with the Pradhan Mantri Awas Yojana having the highest share in it. However, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was not given a fillip. This scheme, which played its part in protecting the rural economy during the Covid-19 lockdown, happens to account for the largest chunk of the total budget of the rural development department.
A positive outlook for the rural sector?
It is expected that rural demand will be buoyant in this financial year, given better returns from rabi crops, high commodity prices and good rainfall conditions. Since farming accounts for a big part of the rural household income, a good outlook for the agricultural sector could have an impact on the overall rural economy.
More farm income, thanks in part to the provisions of the Union Budget 2025-26 and an eased food inflation rate, may give rural consumption a bigger boost.
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The lead image on top depicts a screengrab from a YouTube video of Sansad TV showing Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman, during the Union Budget for 2025-2026. (Image courtesy Sansad TV)
