Funding climate adaptation, balanced fertiliser use and market efficiency is now critical, says Pushan Sharma, Director at Crisil Intelligence

India’s agricultural growth story is increasingly being shaped by forces beyond farm gates—climate volatility, inefficient input use and uneven market support systems. Addressing these challenges in silos will no longer suffice. What is needed instead is a coordinated policy push that strengthens climate resilience, rationalises fertiliser use and stabilises farm prices to protect both productivity and farmer incomes.

According to Pushan Sharma, Director at Crisil Intelligence, climate-related disruptions pose one of the most material risks to Indian agriculture. “A 1°C increase in temperature can potentially reduce crop yields by 4.5–9 per cent, leading to economy-wide losses of up to around 1.5 per cent of GDP annually,” Sharma notes. With agriculture employing nearly half the country’s workforce, such losses would have far-reaching implications for food security and rural livelihoods.

In this context, Sharma underscores the importance of sustained funding for the National Innovations in Climate Resilient Agriculture (NICRA) project, which delivers on-ground adaptation through climate-resilient technologies and infrastructure. These interventions are particularly critical for small and marginal farmers, who are least equipped to absorb climate shocks.

Water security, Sharma argues, is another cornerstone of climate resilience. While schemes under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)—including Per Drop More Crop (PDMC) and Har Khet ko Pani (HKKP)—have made progress, funding gaps remain evident.

Micro-irrigation coverage supported by PDMC grew at a compound annual growth rate of about 13 per cent between fiscal 2015 and fiscal 2023, yet HKKP received just around 4 per cent of the fiscal 2026 budget of the Department of Water Resources, River Development and Ganga Rejuvenation. “Scaling up irrigation resilience through stronger funding is essential to improve last-mile delivery, water harvesting and long-term climate adaptation,” Sharma says.

Beyond climate and water, India’s fertiliser usage patterns present another structural challenge. “Rationalising fertiliser use is crucial for sustainable agricultural growth,” Sharma says. In 2023, urea application in India averaged roughly 182 kg per hectare—significantly higher than the global average of about 116 kg per hectare, though still well below China’s estimated 335 kg per hectare. The national average, however, masks sharp regional disparities, raising concerns about soil health, productivity and environmental sustainability.

The government has taken steps to encourage balanced nutrient management through schemes such as the PM-PRANAM initiative, which incentivises reduced chemical fertiliser use, and the Market Development Assistance (MDA) scheme that promotes organic inputs. Yet Sharma points out that these initiatives require sharper focus and greater financial backing. In fiscal 2026, policies supporting organic fertilisers—including MDA and the GOBARdhan scheme—accounted for just 0.1 per cent of the total fertiliser budget. “Allocations to these schemes must rise substantially if India is to move towards sustainable agriculture without sacrificing yields,” he says.

Even as farmers grapple with climate risks and rising input costs, market price volatility continues to undermine income stability. Price stabilisation mechanisms—such as the Minimum Support Price, the Market Intervention Scheme and the Price Deficiency Payment Scheme—are designed to provide targeted income support while preserving market efficiency. However, implementation has fallen short of intent.

Utilisation of price support schemes under the PM AASHA umbrella stood at only around 64 per cent in fiscal 2022, improving to 89 per cent in fiscal 2023, Sharma notes. Despite this progress, these schemes received just 5–6 per cent of the Department of Agriculture and Farmers’ Welfare’s total budget in fiscal 2026. “To strengthen price stabilisation, the Union Budget should consider higher allocations for PM AASHA, combined with streamlined onboarding, time-bound direct benefit transfers and state-level incentives to improve utilisation,” Sharma says.

Taken together, the message is clear: India’s agricultural resilience cannot be built piecemeal. Climate adaptation, efficient input use and credible price support must move in tandem. As climate risks intensify and fiscal choices become more consequential, the next phase of agricultural policy will be judged not just by intent, but by how effectively resources are aligned with outcomes on the ground.

— Suchetana Choudhury (suchetana.choudhuri@agrospectrumindia.com)