Experts call for agri shift from subsidies to sustainability, nutrition

Ramesh Chand argued that India already looks like a "world power" in rice but added that ambition has to be filtered through desirability and consequences

India is already a heavyweight in global farm trade in pockets such as rice exports, but experts are urging a pivot from a subsidy- and procurement-driven mindset to a productivity and nutrition strategy that still shields farmers from volatility.

 

These views were expressed at a panel discussion titled Can India be the World’s Food Factory? during the Business Standard Manthan summit on Wednesday. The discussion, moderated by Sanjeeb Mukherjee of Business Standard, featured Ramesh Chand, member, NITI Aayog; Ashok Gulati, professor at the Indian Council for Research on International Economic Relations; and Laveesh Bhandari, president and senior fellow at the Centre for Social and Economic Progress.

 

 

Chand argued that India already looks like a “world power” in rice but said ambition must be weighed against desirability and consequences. In becoming a rice export powerhouse, he said, India has also become the world’s largest exporter of “virtual water”. Shipping 1 kilogram (kg) of rice, Chand said, effectively exports about 3,000 litres of water — linking export bravado to falling water tables in intensive rice-growing belts. “So should we acquire this title of being a world power by making our own people water insecure — water insecure in terms of a basic necessity?” he asked.

 

Chand also challenged what he described as a “negative mindset” around agriculture, calling it the sector’s biggest challenge. By his estimate, Indian agriculture grew at an average annual rate of 4.6 per cent over the past 10 years up to 2025 — historically high for the sector. Among major agricultural economies, he said, India is now the fastest-growing, having “beaten” China on that metric.

 

Within agriculture, however, the most subsidised and most “protected” segment — field crops covering cereals, pulses, and oilseeds — has recorded the weakest growth, at around 1.5 per cent once maize is excluded. This is despite the segment being most closely associated with minimum support prices and government backing.

 

“These are the crops that benefit the most in terms of subsidies and support from the government. So this is a big challenge. If the segment where you are putting in so much money is showing minimal growth, that is a serious policy challenge,” Chand said.

 

Adding to the export argument, Gulati said India’s export strength is real but risks stalling if the domestic production model continues to deplete resources and lock in perverse incentives. Large trade negotiations — he referred to the European Union and the US as “the mother and father of all trade deals” — offer opportunities, he said, but only for products that can clear sanitary and phytosanitary barriers.

 

By comparison, Gulati said the world’s two largest economies, China and the US, are net importers of agricultural products, while India remains a net exporter. That surplus, however, does not settle the “feed the world” debate, as India’s binding constraints are nutrition and sustainability. Gulati said India may still be 10–20 years away from nutritional security, citing stunting among children under five at about 35 per cent.

 

He added that soil nutrient depletion has reduced the nutritional quality of produce over time, while groundwater levels in Punjab and Haryana are falling by about 1.5 feet annually, alongside rising contamination, air pollution, and biodiversity loss. “Business as usual has given us food security, not nutritional security. It has damaged the planet’s basic resource endowment. Unless we move towards regenerative agriculture and change our policies, products, and practices, we will not be able to meet even our own needs,” he said.

 

Calling fertiliser reform a “major issue”, Gulati argued that better targeting could free up resources for agricultural research and development. The political economy, he said, has tilted towards free food and near-free urea, with the only noticeable change in a decade being the reduction in urea bag size from 50 kg to 45 kg.

 

Gulati placed hope in AgriStack — a government-led digital public infrastructure for agriculture — and in the use of digital and space technologies to triangulate land records, cropping patterns, recommended nutrient doses, and purchase histories. This, he said, could help identify who is actually farming and what inputs they need, particularly in a system plagued by tenancy and outdated land records. “If we can put these systems in place, you could save at least ₹30,000–40,000 crore every year just from fertiliser subsidies,” he said, adding that India needs to move away from a dole-based model towards a development-oriented one.

 

Bhandari, however, argued that trade deals are largely “reactive mechanisms” and not the main game. The deeper problem, he said, is that India is “too scared” to open up agriculture, leaving competitiveness largely untested. “Large parts of our agriculture sector are not competitive, or at least we believe they are not. They may well be. We don’t know. We haven’t even tried,” he said.

 

He contended that the state often intervenes, creates artificial market failures, and then attempts to fix them with further intervention, eventually producing a subsidy architecture that becomes politically impossible to unwind. He credited much of agriculture’s recent growth not to farm policy but to decades of investment in telecommunications, primary education, and roads. The takeaway, he argued, is that the government should focus on such “contributory issues” where market failures exist, and otherwise “step back”.

 

Bhandari said policy should prioritise just two goals: creating surpluses and protecting the environment. “The government needs to withdraw and let markets work. There will be some messiness. Some people will lose temporarily; others will gain, but outcomes will improve,” he said.

 

Chand, however, called for a more “nuanced” role for the state, observing that every major economy intervenes in agriculture, but the smarter ones do so without distorting prices. “Governments intervene almost everywhere. The difference is that they intervene in ways that do not impose prices on the market,” he said.