Niti vs niyat in farm policy: Agri loan authority should be part of Budget

Without a credible opposition or a coherent farm strategy, India's agricultural policy risks drifting into populism, fiscal stress and long-term rural distress

Seneca, writing in ancient Rome, warned that “Excellence withers without an adversary.” Nearly two millennia later, the insight feels uncomfortably contemporary.  

India today is witnessing a paradox of power. The steady collapse of the Indian National Congress under the Gandhi siblings is hollowing out political contestation. In the absence of a credible opposition, complacency is most visible in the agricultural economics domain.  

Surprisingly, there has been a conspicuous silence from organisations within and those aligned with the Bharatiya Janata Party (BJP) on issues from the Union Budget to the Economic Survey, from the Aravalli ecology to labour; from electricity to pesticide and seed legislation. Policies are left to fend for themselves not because they are weak but because no one argues for them, other than the concerned ministers.  

When agrarian policy is not defended, it loses legitimacy, even before it can hope to deliver. This also erodes the political capital, putting pressure on the Budget to fall back on populism while agrarian reforms get stalled.  

Agriculture and the budget have a new force to reckon with: The impact of  tariffs imposed by the United States (US). The hard truth is that making a deal with God is no different from making a deal with the Devil. One cannot bargain with a power exponentially greater than oneself, even though the Indian economy has had providence being kind to it.  

India has enjoyed bountiful monsoons for over a decade and an extended economic breather from low crude prices. This allows for economic latitude to design policies that deploy resources with greater nuance. Budget allocations are predictable: My instinct is allocations for agricultural research & development (R&D) will see a substantial hike.  

Meanwhile, G-Ram G (Guarantee for Rozgar and Ajeevika Mission [Gramin]), is likely to be held at last year's MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Scheme) outlay, even as the scheme quietly shifts an additional 30 per cent fiscal burden on to the states. Such optics mask a deeper shift of fiscal responsibility in federalism. The arithmetic is clear even if the politics are evasive. 

Even if one were to accept the NITI Aayog paper on farmer incomes at its face value, farmer incomes have doubled in ‘nominal-terms’ and not in ‘real-terms’. For the first time ever, a larger part of the agricultural household income is coming from ‘non-agriculture’ income and not from their primary profession. This policy-driven suppression of farmgate prices over long periods is triggering a structural and sectoral contagion across the economy.  

To protect farmgate prices, imports of MSP (minimum support price) crops must attract tariffs, calibrated to ensure that the landing cost never undercuts the MSP.  

Inflation is subdued and foreign exchange reserves are under pressure, which are conditions that actually strengthen the case for such protection. Done right, this would support farmer livelihoods and revive rural consumption without fiscal commitments.

The policies have less to do with inflation than with political control. Policies are also riddled with contradictions. While the stated objective is natural farming, the bulk of public funding continues to flow towards chemical fertiliser subsidies (about ₹1.70 trillion). The persistent gap between allocation (₹459 crore) and actual utilisation (₹30 crore) for the National Mission on Natural Farming only reinforces the point.  

These figures are dwarfed by what the Budget will not account for: The Eighth Pay Commission, an annual fiscal burden of roughly ₹2 trillion. Call it pessimism if you must. I would rather be described as an optimist tempered by experience.  

When policymakers block out voices from the margins, and evade accountability, environmental damage is crippling and remains unaddressed. On 2.4 per cent of the world’s area, India supports 18 per cent of the world's population and 16 per cent of the world’s livestock. Desertification and degradation impacts 30 per cent of the land.  

Additionally, millions of hectares of arable land have been gobbled up by urbanisation and development, and more is being released for development mindlessly.  

In spite of the frightening landscape, policymakers cannot comprehend how to reverse the damage. It is not that it cannot be reversed, like for the irrigation-induced damage (salinisation and waterlogging) on millions of hectares —over 15 per cent of India’s irrigated cropland — which can be addressed by prioritising allocations for providing drainage for existing irrigated areas over new flood-irrigation projects. 

The cooling of GDP growth may be an early indicator of something larger to come, further complicating the political trade-offs.  Tweaking allocations or policies is good optics but not enough to make Bharat viksit. The government’s new focus on reforms is remarkable but these now need to extend to land and agriculture — like a law for land-leasing, a rethink on land ceiling laws, rationalising fertiliser and food subsidies or dispersal of subsidies based on area production plans and allowing futures trading of agricultural commodities. 

The digitisation of the Bharat Krishak Samaj archives (1955–1980) reveals a striking continuity in policy discourse: Many of the foundational recommendations for Indian agriculture remain substantively unchanged across seven decades. A similar pattern is evident in successive Union Budgets — it is frustrating to give new recommendations, when earlier suggestions remain just that. 

Let me take one final stab at it though: The establishment of a dedicated ‘Agriculture Innovation Fund’ to support foundation-level agricultural research. Consider just one domain: The soil microbiome. It’s the next scientific frontier where we will understand how life systems in the soil communicate, cooperate and co-evolve. Modern science will converge with natural farming and ultimately new principles of post-modern agriculture will emerge. 

Those working in policy and advocacy have learnt more from failure than from success, largely because India has had more of the former.  

A new lesson is the need to curb the vested influence of external actors by building internal capacity within the government. That begins with transparency. India needs a conflict of interest law, applicable to elected representatives, Indian Administrative Service officers, and senior management of government-controlled or autonomous institutions. A state that cannot distinguish between advice and influence, between expertise and entanglement, slowly surrenders its sovereignty without a vote ever being cast. 

One note of caution is in order. The future, as the warning goes, is nearer than it appears. Farm indebtedness is accumulating quietly. The government would be well-advised to establish an authority, akin to a debt recovery tribunal, for agricultural loans. In the absence of such a framework, the pressure for blanket loan waivers will resurface, forcefully, as the electoral cycle approaches 2029. 

Finally, without being ironical but in all earnestness, India’s agricultural plan cannot fail because India does not yet have one. Transforming the farm sector will take more than intent (niyat), which is in ample measure in this government; it requires a plan (niti), an architecture in which the fine print addresses the farmers’ point of view. 

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The writer is chairperson, Bharat Krishak Samaj