Subsidies or science? India's farm future hinges on scaling up R&D

India’s farm policy debate is often reduced to a choice between subsidies and reforms. Subsidies are, and likely will remain, necessary, especially as climate change makes farming more volatile. But, say experts, they are not a substitute for robust, science-driven agricultural research. 

 

Over the past decade India’s gross expenditure on research and development (R&D) has tripled in nominal terms, yet it still accounts for a mere 0.6-0.7 per cent of GDP, far below the 2 per cent or more spent by most developed countries. 

 

Unless India decisively shifts towards stronger public agricultural R&D and reforms how that research is organised, experts say, it will keep spending larger and larger sums managing farm distress instead of preventing it. 

 

According to Union Budget data, the allocation for agricultural research and education (ARE) rose from ₹4,836 crore in 2014-15 to ₹9,266 crore in 2026-27. On paper this looks like a near-doubling, but the compound annual growth rate is just under 6 per cent, with an average annual increase of about 7.5 per cent and strong volatility across years. 

 

In 2022-23, for example, ARE spending grew by merely 0.05 per cent before rebounding sharply in 2023-24. 

 

This slow and lumpy trajectory contrasts sharply with the surge in private R&D. For instance, global biotech and agri-major Bayer’s India R&D expenditure alone reached ₹7,230 crore in 2024-25, which is close to 75 per cent of the total ARE allocation in the same year.

 

Economist Ashok Gulati of the Indian Council for Research on International Economic Relations (Icrier) said government spending on agriculture R&D is “not even peanuts” by global standards. 

 

“The Indian Council of Agricultural Research’s (Icar’s) total budget remains under ₹10,000 crore, while one multinational agribusiness, Bayer, spends about €2.6 billion in R&D worldwide, which is roughly three times what India’s Icar spends.” 

 

Private investors focus on hybrids and short-term payoffs because they need to recover their outlays through seed prices. Attempts to cap seed prices, he argued, weaken the commercial incentive for innovation and pushes private players away from long-term, fundamental research.

 

Behind low yields

 

India’s approach to research has also remained narrow, with excessive emphasis on staples like wheat and rice, while pulses and many other crops lag in productivity. On average, India’s corn and soybean yields are about one-third of those in the US, where genetically modified (GM)-enabled varieties have been widely adopted. 

 

GM crops are grown in 76 countries across more than 200 million hectares; in the US, corn yields exceed 11 tonnes per hectare versus India’s roughly 3.5 tonnes, and soybean yields are more than three times higher. Gulati contended that blocking GM or gene-editing technologies risks leaving India behind just as advanced breeding methods become agriculture’s future. 

 

The Union Budget 2026-27, however, has cut, not enhanced, the space for such publicly funded agricultural research. 

 

Overall agriculture spending has not fallen: Allocations for animal husbandry and fisheries have risen, and outlays for fertilizer subsidies and food procurement have climbed even more. 

 

In 2025-26, urea subsidies alone exceeded the net expenditure of the department of agriculture and farmers’ welfare, and total fertiliser subsidies were nearly one-third higher than the combined outlay of the ministry of agriculture and the ministry of fisheries, animal husbandry and dairying. 

 

Yet the department of agricultural research and education (DARE) saw its budget drop from ₹10,470 crore to ₹9,970 crore which is a 5 per cent cut from an already-modest base. Even more telling, DARE’s capital expenditure was only ₹2,490 crore in 2025-26 and is pegged at ₹2,450 crore in 2026-27, underscoring how little room there is for new labs, equipment, or expanded trial networks.

 

Costly imbalance 

 

India’s farm growth over the last decade has relied largely on deploying more inputs and on higher output prices, rather than on broad-based efficiency gains. The gross value of output has grown faster than gross value added, especially in crops, which signals an expensive and unsustainable path: Farmer incomes stay under pressure, healthy food becomes less 

 

affordable for consumers, taxpayers bear rising subsidy bills, and soil, water, and air degradation accelerates.

 

There are three main levers for raising production efficiency: Innovtion (which depends on research); reducing distortions in input and output prices by repurposing subsidies; and building strong institutions that can deliver technology and risk-management support over the long term. 

 

Annual budgets are rarely the right place for sweeping subsidy reforms, given their political and administrative complexity. But cutting an already modest investment in agricultural R&D is hard to justify at a time when more than half the Indian population cannot afford a healthy diet, when productivity is lagging and climate uncertainty is intensifying. 

 

The lure and limits of subsidies

 

A study by Icrier estimates that around 73 per cent of India’s agriculture budget is absorbed by subsidies and welfare schemes, with food and fertiliser subsidies alone accounting for well over half of agrarian spending. Over the past five years, food and fertiliser subsidies have ranged between ₹3.8 trillion and ₹5.3 trillion. In 2026-27, the combined food, fertiliser and fuel subsidy bill is projected to exceed ₹4.1 trillion, which is more than 44 times the allocation for agricultural research and education.

 

Subsidies do play a stabilising role. Food subsidies have helped reduce poverty and cushion vulnerable households, while fertiliser and power support have helped keep input costs manageable in the short term. But they address symptoms rather than root causes, experts said. They do not, by themselves, raise yields, lower unit costs, or build resilience against drought, heat-stress or erratic monsoons.

 

Decentralised R&D 

 

International experience shows that restructuring research can transform farming at scale. Brazil’s Embrapa, a government-linked research institution, transformed agriculture by decentralising research, tailoring innovations to local agro-climatic conditions, and tightly integrating research with extension, credit, and markets, generating productivity gains that exceeded 100 per cent on some commodities. 

 

A recent working paper from India’s National Institute of Agricultural Economics and Policy Research (NIAP) estimates that every rupee invested in agricultural research yields a return of nearly ₹13.85, outpacing returns from almost any other farm-linked activity.

 

India’s research architecture, by contrast, remains highly centralised, with limited autonomy or resources at the state and regional levels. Icar’s National Innovations on Climate Resilient Agriculture (NICRA) programme has created 448 climate-resilient villages reaching nearly 693,000 farmers through technology demonstrations, training, and capacity-building. 

 

Yet this is still minuscule, given the fact that India is home to 146 million farmers. Experts advocate a high-level agricultural council to set priorities, steeper investment in climate-resilient research, better crop insurance, and digital extension services to speed up adoption.

 

Rebalancing priorities

 

Subsidies stabilise agriculture, research transforms it. As climate volatility rises and the fiscal space tightens, experts said, India cannot afford to keep expanding subsidy bills while underinvesting in innovation. A decentralised, better-funded public research system — linked to local conditions and supported by digitally enabled extension — is the foundation of long-term farm resilience and rural prosperity. 

Public vs private farm R&D

• Modest increase in agricultural R&D spending from ₹4,836 crore in 2014–15 to ₹9,266 crore in 2026–27, growing at 6% CAGR
• R&D spending by Bayer India alone reached ₹7,230 crore in 2024–25
• Total food, fertiliser and fuel subsidies to top ₹4.1 trillion in 2026–27, 44 times farm R&D spending 
• Every rupee invested in farm research fetches ₹13.85 in economic benefits