The budget announced a slew of schemes for rural India, focusing on improving crop productivity and credit access for farmers. But funding for most non-farm schemes has declined in real terms. How will this impact income and consumption demand? Mint explores.
What did the budget do for farmers?
There’s a new scheme to improve crop productivity and credit access in 100 under-performing districts. But there is no separate fund and the scheme will be implemented by converging existing ones. A host of national missions were announced on cotton, pulses, fruits and vegetables and high-yielding seeds but together they received a modest ₹2,100 crore, not enough to make a difference. Despite rising weather-related risks to production and farm revenue, the budget cut funding for the flagship crop insurance scheme by ₹3,600 crore. Despite a focus on yields, funds for research were raised by only ₹300 crore.
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How will this impact farm incomes?
Between 2019 and 2024, workers engaged in agriculture shot up by 68 million. This depressed wages and per-worker productivity. Currently, farmers are selling crops like soybean, groundnut, moong and lentils at less than minimum support prices (MSP). Under the newly announced pulses mission, the budget promised to procure three varieties of pulses at MSP. However, the allocation for PM-AASHA, the scheme under which the government supports farm-gate prices, has only seen a paltry ₹500 crore increase. There is no immediate upside to farm incomes from budget allocations.
What about non-farm incomes?
The budget announced a prosperity and resilience scheme aiming to skill rural youth and reduce distress migration. But it kept funding for flagship jobs scheme MGNREGS unchanged at ₹86,000 crore. This is a decline in real terms. Additional funds for MGNREGS would have boosted consumption among the poorest who work for less than minimum wages.
Did rural schemes get a boost?
For Pradhan Mantri Gram Sadak Yojana, funding is unchanged at ₹19,000 crore. Funds for rural housing were marginally raised by ₹332 crore; with a budget of ₹54,832 crore in 2025-26, this is a decline after adjusting for inflation. For the rural drinking water mission, the allocation for 2025-26 ( ₹67,000 crore) is lower than the ₹70,000 crore in 2023-24. Overall, the budget for rural development schemes is unchanged at ₹2.6 trillion. With rural wages stagnant, this means no immediate relief for villages.
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How will it impact consumer demand?
The largesse of ₹1 trillion in terms of tax cut will benefit fewer than 30 million Indians. This is expected to spur consumer demand for discretionary and white goods. But families may also use part of the tax savings to repay loans, and not spend the entire amount. For rural India, much will depend on how crop output and prices move. The winter harvest of wheat needs to be watched closely as a sudden spike in the mercury ahead of harvest will reduce yields. MSP support will also be critical to farm incomes.