Summary:

According to an ICRIER analysis, welfare packages and subsidies account for 73% of India's agriculture budget, totaling US$ 54.34 billion (Rs. 4.55 trillion). This includes the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and food and fertilizer subsidies, which make up over half of the FY25 Union Budget for rural sectors. Despite a US$ 74.05 billion (Rs. 6.2 trillion) commitment to agriculture, which constitutes 18% of GDP, rural earnings remain low, averaging less than US$ 238.86 (Rs. 20,000) per month.

Low earnings in farming households limit demand for non-agricultural items, impeding industrial expansion. Traditional welfare systems offer lower returns compared to investments in agricultural research, development, irrigation, and skill enhancement. According to MOSPI’s NSSO, rural expenditure averaged US$ 45.06 (Rs. 3,773) per month in 2022-23, compared to US$ 77.14 (Rs. 6,459) for urban residents. Rural demand is improving but remains affected by irregular monsoons, inflation, and unseasonal rainfall. Budget 2024 includes initiatives to enhance agriculture, such as new seeds, natural farming, and digital infrastructure.

Source: IBEF 

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