Expanded budgetary support signals strategic focus on income stability and market balance

As onion price fluctuations continue to affect both producers and consumers, the Department of Agriculture & Farmers Welfare (DA&FW) has reinforced a comprehensive framework aimed at protecting onion farmers from distress sales while stabilizing retail markets. Although agriculture remains a State subject, the Government of India has significantly scaled up its financial commitment to the sector. Budget allocation for DA&FW has increased from Rs 21,933.50 crore in 2013–14 (BE) to Rs 1,27,290.16 crore in 2025–26 (BE), reflecting a sustained policy thrust toward strengthening farm incomes, risk mitigation, and price stabilization.

Price Stabilisation Fund Anchors Market Intervention Strategy

A key pillar of the government’s approach is the Price Stabilisation Fund (PSF), introduced in 2014–15 to address excessive volatility in agri-horticultural commodities. Under this mechanism, sizeable onion buffer stocks are created annually to absorb surplus production during peak arrival seasons and to moderate retail prices during supply shortages.

Central agencies such as National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) and National Cooperative Consumers’ Federation of India Ltd (NCCF) procure onions at market-driven, farmer-friendly prices. This strategy helps prevent steep price crashes that undermine farm incomes while also discouraging hoarding and speculative trading. When necessary, calibrated releases from buffer stocks are made through retail outlets, state governments, and digital platforms to stabilize prices and ensure adequate market availability.

Market Intervention Scheme Shields Farmers During Bumper Harvests

To prevent distress sales during periods of excessive production, the government implements the Market Intervention Scheme (MIS), a component of Pradhan Mantri Annadata Aay Sanrakshan Abhiyan. The scheme is activated when market prices fall at least 10 percent below the previous normal year’s levels, enabling procurement of perishable commodities such as onion that are not covered under the Price Support Scheme.

MIS is implemented at the request of State or Union Territory governments, which share 50 percent of any losses incurred during operations, with a lower 25 percent contribution for North-Eastern States. The objective is to ensure that farmers receive remunerative prices even during periods of oversupply.

Direct Price Differential Payments Introduced for Greater Flexibility

From the 2024–25 season, the government introduced a Price Differential Payment (PDP) component under MIS. This mechanism allows states to compensate farmers directly for the difference between the Market Intervention Price and the actual sale price, instead of undertaking physical procurement. The PDP model offers flexibility and reduces logistical challenges while ensuring that growers are protected from sudden market downturns. States and Union Territories may now choose between physical procurement or direct differential payments, depending on local conditions.

Logistics and Storage Support for TOP Crops Strengthens Supply Chains

Recognizing the structural challenges in transporting perishable produce, the government has also introduced reimbursement of storage and transportation costs for Tomato, Onion, and Potato (TOP) crops under MIS from 2024–25.

This provision supports central nodal agencies and state-designated agencies in moving produce from surplus-producing regions to deficit markets. Complementing these measures are ongoing efforts to promote modern onion storage structures, scientific curing, grading and sorting facilities, cold-chain infrastructure, and value-addition units, all aimed at reducing post-harvest losses and improving farmer realization.

Crop Insurance Provides Climate Risk Protection

Beyond price volatility, onion farmers face significant risks from natural calamities. To provide financial protection against crop losses due to non-preventable events, the government continues to implement Pradhan Mantri Fasal Bima Yojana and the Restructured Weather Based Crop Insurance Scheme (RWBCIS), operational since Kharif 2016. PMFBY offers comprehensive coverage from pre-sowing to post-harvest stages at minimal premium rates, with onion eligible for notification by state governments.

During the last three years from 2022–23 to 2024–25 (as on 31 December 2025), seven major onion-producing states — Andhra Pradesh, Chhattisgarh, Karnataka, Maharashtra, Odisha, Rajasthan, and Tamil Nadu — notified onion under PMFBY in one or more seasons. Across these states, 27,21,482 farmer applications were enrolled.

The Central Government’s share in premium subsidy amounted to Rs 339.53 crore, while total claims paid to insured onion farmers reached Rs 701.54 crore. Maharashtra accounted for the largest share, with over 22 lakh enrolled applications and claims exceeding Rs 453 crore, highlighting the scale of risk coverage in the country’s primary onion-producing region.

Toward a Structured and Predictable Support Framework

The evolving policy framework reflects a deliberate shift from ad hoc market responses to structured, multi-layered risk management. By combining buffer stocking, market intervention, direct income support mechanisms, logistics reimbursement, and comprehensive crop insurance, the government aims to create greater predictability for onion farmers operating in a historically volatile market.

As onion prices continue to influence both rural incomes and urban inflation dynamics, the strengthened safety net underscores a calibrated effort to balance farmer welfare with consumer interests. The integrated approach signals that income protection for horticulture growers is increasingly embedded within the broader architecture of agricultural policy and fiscal planning.