MAINS Current Affairs includes Agriculture Subsidy in India & Fiscal Sustainability & Agri Stack in India: Transforming Agricultural Governance

AGRICULTURE; ECONOMY

1. Agriculture Subsidy in India & Fiscal Sustainability

Context

• India has maintained relatively stable retail prices of key agricultural inputs such as urea and dieselthrough extensive support and agricultural subsidies, despite increasing international crude oil and fertilizer prices amid Middle East conflict.

About Agricultural Subsidy

• It refers tofinancial assistance provided by the government to farmers to reduce input costs, stabilize incomes, and ensure food security.
• India’s subsidy framework emerged strongly during the Green Revolutionto incentivize fertilizer use, irrigation, and high-yield crop cultivation.

Major Agricultural Subsidies in India

• Fertilizer Subsidy: India is among the largest fertilizer subsidising countries Subsidy mainly supports Urea, DAP (Diammonium Phosphate), Potassic and phosphatic fertilizers.
  • Nutrient Based Subsidy (NBS) is applicable for phosphatic and potassic fertilizers, and subsidy linked to nutrient content. Farmers pay only a fraction of actual market cost.
• Food Subsidy: Implemented through the Public Distribution System (PDS)and procurement by the Food Corporation of India (FCI).
  • Ensures food security and MSP-based procurement.
  • Key Components: MSP procurement, PDS, and PM Garib Kalyan Anna Yojana integration.
  • Around 80 crore beneficiariesunder NFSA.
• Power Subsidy: Free or highly subsidised electricity for irrigation pumps in many states.
  • States collectively spend over ₹1.5–2 lakh crore annuallyon power subsidies.
  • Major beneficiary states are Punjab, Haryana, Telangana, Andhra Pradesh, and Tamil Nadu.
• Irrigation Subsidy: Low water charges for canal irrigation and support for micro-irrigation.
• Income Support: It provides direct income support, and reduces dependence solely on price subsidies.
• Minimum Support Price (MSP) Support: MSP announced for 22 mandated cropsand sugarcane.
  • Wheat and paddy account for majority procurement.
  • The MSP system disproportionately benefits a few states like Punjab, Haryana, and Telangana.

Importance of Agri-Subsidy

• Ensuring Food Security: Subsidies played a major role in transforming India from a food-deficit nation to a food-surplus economy.
• Supporting Farmer Incomes: Small and marginal farmers, who constitute nearly 86% of landholdings, benefit from lower input costs.
• Stabilising Agricultural Production: Subsidies help maintain crop production and rural stability by insulating farmers from global price volatility.
• Promoting Rural Economy: Agricultural support stimulates rural demand, employment, and allied sectors.
• Strategic Importance: Stable agricultural production reduces dependence on imports and strengthens national food sovereignty.

Key Concerns, Issues and Challenges in Agricultural Subsidies

• Rising Fiscal Burden: India’s fertilizer subsidy bill has risen sharply in recent years due to increasing global prices of natural gas and fertilizers.
  • Fertilizer subsidy expenditure crossed several lakh crore rupees in recent years. Such expenditure limits fiscal space for infrastructure, health, and education.
• Distorted Cropping Patterns: Subsidies and MSP procurement heavily favour water-intensive crops such as wheat and paddy, especially in Punjab and Haryana.
  • It has led to groundwater depletion, soil degradation, and declining crop diversification.
• Environmental Concerns: Excessive use of subsidised urea has caused soil nutrient imbalance, declining soil fertility, and increased greenhouse gas emissions.
  • The Economic Survey has repeatedly highlighted the overuse of nitrogenous fertilizers.
• Inefficient Targeting: Large farmers often capture a disproportionate share of subsidies due to higher land ownership and input consumption.
  • Many tenant farmers and landless cultivators remain excluded.
• Dependence on Subsidy Culture: Excessive reliance on subsidies can discourage innovation, diversification, and efficient resource use.

Key Efforts and Government Initiatives

• PM-KISAN Scheme: Direct income transfer of ₹6,000 annually to farmers through DBT.
• Neem-Coated Urea: Introduced to reduce diversion and improve nitrogen-use efficiency.
• Direct Benefit Transfer (DBT) in Fertilizers: Implemented to improve transparency and reduce leakages.
• PM-KUSUM Scheme: Promotes solar pumps and renewable energy in agriculture.
• Pradhan Mantri Krishi Sinchayee Yojana (PMKSY): It focuses on ‘Per Drop More Crop’, micro-irrigation, and water-use efficiency.
  • It expands drip and sprinkler irrigation systems, and increases irrigation coverage.
• National Mission for Sustainable Agriculture (NMSA): Encourages climate-resilient and resource-efficient farming.
• National Agriculture Market (e-NAM): Aims to integrate agricultural markets digitally and improve price discovery.

Way Forward: Strengthening the Agri-Subsidy Ecosystem

• Rationalising Subsidies: Subsidies should gradually shift from product-based support to income-based support while protecting vulnerable farmers.
  • A balanced transition can reduce fiscal stress without harming farmer welfare.
• Promoting Crop Diversification: Policies should incentivise pulses, oilseeds, and millets instead of excessive wheat-paddy cultivation.
  • The declaration of millets as ‘Shree Anna’ is a step in this direction.
• Encouraging Sustainable Agriculture: Support for organic farming, natural farming, precision agriculture, and micro-irrigation can improve productivity while reducing ecological stress.
• Better Targeting through Technology: Use of Aadhaar-linked databases, land records digitisation, and DBT systems can improve subsidy efficiency and reduce leakages.
• Strengthening Agricultural Markets: Reforms should focus on storage infrastructure, Farmer Producer Organisations (FPOs), agri-logistics, value chains and food processing.
• Balancing Welfare and Fiscal Prudence: Long-term sustainability requires balancing welfare measures with fiscal discipline and productivity-enhancing reforms while subsidies remain essential for rural stability.

AGRICULTURE

2. Agri Stack in India: Transforming Agricultural Governance

Context

• Agri Stack represents a major step towards data-driven agriculture by integrating land records, farmer details and crop information into a unified digital ecosystem.

What is Agri Stack?

• It is a digital agriculture frameworkdeveloped under the Digital Agriculture Mission to create a unified and standardised database of farmers, land records and crops in India.
• It comprises three interconnected registries:
  • Farm Registry: It contains a database of geo-referenced agricultural plots. Every agricultural land parcel is digitally mapped to ensure accurate identification and verification.
  • Farmer Registry: Each land-owning farmer is assigned a unique Farmer IDlinked to ownership details of agricultural plots, share in case of co-ownership, and dynamic land ownership updates through integration with the Record of Rights (RoR).
  • Crop Sown Registry: This layer records details of crops cultivated on each plot through digital crop surveys, mobile-based data collection, geotagging, and satellite support.
• These surveys are conducted every crop season after sowing.

Key Features of Agri Stack

• Federated Architecture: Agri Stack follows a federated database model, allowing States to maintain flexibility while ensuring interoperability across schemes and departments.
• Privacy and Data Protection: The system is designed with adherence to data protection principles, rule-based access, secure and consent-driven use of farmer data.
• Technological Integration: The platform integrates GIS mapping, mobile applications, satellite imagery, and digital land records.
  • It improves accuracy and reduces duplication and fraud.

Progress Achieved

• According to government data, more than 40 crore Farmer IDshave been generated.
• During 2025–26, digital crop surveys were conducted for nearly 30 crore plots, across more than 600 districts in 24 States.
• The use of mobile devices, geotagging and satellite support marks a shift from traditional manual surveys, which were often slow and error-prone.

Benefits of Agri Stack

• Improved Delivery of Welfare Schemes: Agri Stack acts as a single source of truth, reducing repeated verification and lowering transaction costs for farmers.
  • It enables accurate beneficiary identification, Direct Benefit Transfer (DBT), reduced leakages and duplication.
• Better Agricultural Extension Services: Integration of land records, crop details, and soil health data can help provide personalised advisories related to sowing schedules, irrigation, fertiliser application, and pest management.
  • It can improve productivity and resource efficiency.
• Data-Driven Policymaking: Availability of real-time agricultural data helps governments monitor cropping patterns, anticipate supply-demand gaps, prevent price volatility, and improve disaster response and procurement planning.
• Breaking Departmental Silos: Earlier, multiple Ministries and States maintained separate farmer databases.
  • Agri Stack creates a common digital layer enabling interoperability across schemes and departments.
• Opportunities for Innovation: As Agri Stack matures, it can create opportunities for agri-tech start-ups, precision agriculture tools, weather and market advisory platforms, credit and insurance innovations.
  • Applications combining crop data, weather forecasts and market prices can improve farmers’ decision-making.

Challenges and Concerns

• Digital Divide: Limited digital literacy and poor internet connectivity may affect adoption among small and marginal farmers.
• Data Privacy: Protection of sensitive farmer data and ensuring informed consent remain critical.
• Land Record Issues: Outdated and disputed land records in many States can hinder accurate database creation.
• Federal Coordination: Successful implementation requires continuous coordination between Centre and States.

Conclusion

• Agri Stack is a significant reform in India’s agricultural governance architecture. It seeks to improve welfare delivery, enhance transparency and promote evidence-based policymaking by creating a standardised, interoperable and technology-driven database.
• Its success, however, will depend on accurate land records, strong privacy safeguards, inclusion of vulnerable cultivators, and capacity building at the grassroots level
• Agri Stack can become a foundational digital public infrastructure for Indian agriculture, comparable in transformative potential to platforms like UPI in the financial sector if implemented effectively.

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