This year, the budget will likely focus on giving a fresh boost to the rural economy, with the Prime Minister’s Office urging the Finance Ministry to accelerate agricultural development.
“The Prime Minister’s Office (PMO) has taken cognizance of the declining growth rate in the agriculture sector, which is projected to decline from 4.6 per cent in 2024-25 to 3.1 per cent in 2025-26,” a source with access to the PMO said.
One way to achieve this in the Budget would be to propose measures to strengthen cooperative farming and promote value-addition in agricultural value chains.
promotion of rural employment
“The government can focus on promoting farmer groups, improving post-harvest infrastructure and supporting agro-processing units to boost income and rural employment,” the source said.
Policy emphasis will be on integrating small and marginal farmers through cooperatives to achieve economies of scale in production, modernize supply chains and enhance market competitiveness.
The Budget proposals will likely be in line with the broader rural revitalization agenda, ensuring sustainable agricultural growth along with value-driven economic diversification.
Data shows that despite food grain production reaching record highs in the last five-six years, the average gross value added (GVA) in agriculture has remained at 3-4 per cent due to the Covid pandemic and climate change-related problems.
gva share slip
Last year, the Economic Survey had said that sustained and stable agriculture growth of around 5 per cent, with a 20 per cent share of overall GVA in the economy, would contribute 1 per cent to GVA (gross value added).
However, the agriculture ministry’s annual report for 2024-25 said the share declined from 20.4 per cent in 2020-21 to 17.7 per cent in 2023-24 (see table).
Agricultural production has been affected in the past few years due to La Nina, which brings heavy rainfall, and El Nino, which brings drought.
Since 2020, there have been four years of La Niña – 2020, 2021, 2022 and 2025–26 (a weak phase is currently underway), and an El Niño in 2024, which disrupted agriculture with unseasonal rains or heatwaves.
collaborative areas shine
Agriculture’s contribution to GDP increased to 20 per cent during Covid, when it was the best performing sector. Since then it has come down to 18-19 percent.
More than agriculture, allied sectors like livestock are helping the farmers to earn better income. In 2024, when the country was affected by drought and the production of crops was affected due to prolonged dry period, dairy and livestock provided major support to the farmers.
Last year, the Economic Survey had said allied sectors would become the key driver of agricultural growth in 2023-24. “The livestock sector alone represents 5.5 per cent of the total GVA, reflecting its dynamic growth trajectory with a strong compound annual growth rate (CAGR) of 12.99 per cent,” it said.
economic importance
The economic importance of this sector can be seen from its growing production value, which is expected to reach ₹17.25 lakh crore in 2022-23.
The focus on cooperatives will be important, as by December 2025, there were more than 8.5 lakh cooperative societies recorded in the National Cooperative Database (NCD), of which 6.6 lakh are operational, covering about 98 percent of rural India across 30 sectors.
These cooperatives have integrated women-led self-help groups and enrolled farmers, milk producers and fishermen, bringing 10 crore women into the cooperative framework.
Institutions like Amul, NABARD, KRIBHCO and IFFCO, With thousands of local societies and cooperatives, it is a fundamental pillar of India’s economic architecture.
Apart from these, the government established the National Cooperative Exports Limited to act as an umbrella organization for exports by the cooperative sector.
When El Nino looms
Sources said that while global weather organizations have predicted the emergence of El Nino after July, focus on farming by cooperative societies or farmer-producer organizations (FPOs) will help in many ways.
On the other hand, sources said the government should promote agricultural exports by asking institutional agencies like the Agricultural and Processed Food Products Export Development Authority (APEDA) to focus on increasing market access.
India will have to increase its export basket by exporting rice, cereals, spices, coffee, tea and horticulture products. Sources said emphasis should also be laid on other agricultural products. “Exports should be a strategic framework for India’s geopolitics,” the source said.
Published on January 26, 2026
