The Union Budget is the most consequential policy moment of the year, setting the direction and priorities of the national economy. When Finance Minister Nirmala Sitharaman presented the Budget for 2026-27 on February 1, farmers and stakeholders across the agricultural and rural economy were watching closely. Their expectation was clear: that an economy growing at over 7 per cent would offer stronger momentum to agriculture and allied sectors, which continue to trail at a growth rate of around 3.1 per cent. Instead, agriculture and farmers found themselves confined to a narrow and underwhelming space in the Budget speech – something that does not bode well.

Budgetary allocations for agriculture and allied sectors have risen only marginally over last year. However, a portion of the previous year’s allocation remained unspent. If we take the revised figure as the baseline, the gap between the budgets of the two years becomes somewhat significant.

The Finance Minister has announced two notable initiatives for agriculture in this Budget: one, incentivizing high-value plantation crops and two, the introduction of an artificial intelligence (AI)-based platform designed to provide customised information and advisory services to farmers. Allocations for animal husbandry and fisheries have also increased more robustly than last year. Yet, when it comes to the stated goal of raising farmers’ incomes, the Budget adopts a limited view, leaving large segments of the agricultural economy untouched. Ongoing schemes and programmes, too, have not been dealt with in detail, and the incentives introduced in recent years to encourage the adoption of new farming practices find no mention.

This narrow framing is particularly striking in light of the Economic Survey tabled in Parliament just days before the Budget. The Survey had underscored agriculture’s critical role in ensuring macroeconomic stability and advocated reforms. It had also acknowledged that nearly 46 per cent of India’s workforce depends on agriculture, even as the sector grapples with challenges like climate change, deteriorating soil health, stagnant or declining productivity, and policyinduced distortions in cropping patterns. But the Finance Minister did not feel the need to take up these issues in the Budget. Also, the Budget turned a blind eye to agricultural research, arguably one of the most effective pathways to raising farm incomes in a country dominated by small and marginal holdings and a large number of farmers. The nearly Rs 300-crore cut in allocations for agricultural research and education, too, sends a discouraging signal.

The government had spoken in the previous Budget about incentivising private-sector participation in agricultural research. Its silence on this front again indicates some confusion in government’s thinking and its inability to determine the clear reason for not increasing spending on agricultural research. When nearly 90 per cent of the Indian Council of Agricultural Research (ICAR) budget is absorbed by establishment costs, the scarcity of resources available for actual research becomes self-evident. This issue of Rural World examines budgetary provisions and priorities in detail through its cover story, complemented by insights from leading agricultural experts.

Another big issue is that of international trade agreements. Over the past year, India has concluded several major free trade agreements (FTAs), among which the India-European Union (EU) FTA is being touted as the “mother of all deals”. While FTAs have been signed with New Zealand, Oman and the UK, India is in the final stages of negotiating a trade deal with the United States (US) too. In a global trading system where the relevance of the WTO is waning, FTAs have assumed central importance. The government has maintained that the interests of the agriculture and allied sectors and the farmers have been safeguarded in these agreements. However, their real implications will become clear only at the stage of implementation because our country is not consulting the stakeholders before giving the agreements a final shape. An article by Professor Biswajit Dhar, an expert on this issue, explores these concerns in depth.

Indian agriculture and farmers cannot remain insulated from these agreements. Whether they ultimately benefit or harm farmers will be evident only in the future, but it would be naïve to assume that major economies enter such arrangements for India’s benefit alone. Each of them is driven by its own strategic and commercial interests. The coming years, therefore, mark a period of profound transition for Indian agriculture – one that demands preparedness, policy coherence, and a far clearer sense of priority than the Budget currently conveys.