Economic Survey lays bare deep fault lines in Indian agriculture

The Economic Survey 2025–26 paints a sobering picture of Indian agriculture, revealing a sector weighed down by structural inefficiencies, widening productivity gaps and mounting resource stress, despite periodic resilience. Far from being a growth engine, agriculture continues to struggle with chronic weaknesses that threaten both farmer incomes and long-term food security.

One of the most glaring concerns flagged by the survey is India’s persistent underperformance in crop yields compared to global benchmarks. Yields of major crops — including pulses, cereals, maize and soybean — remain significantly below international averages.

Even within the country, sharp regional disparities persist. In several major rice-producing states, yields trail the national average due to unseasonal rainfall, heat stress and prolonged dry spells during crucial crop stages, underscoring agriculture’s increasing vulnerability to climate shocks.

Pulse cultivation emerges as particularly fragile. The survey notes that in 15 of the last 27 El Niño years, pulse acreage and output fell sharply, with yield losses ranging between 5 and 25 per cent. This volatility has made domestic production unreliable, increasing dependence on imports and exposing consumers to price swings.

Equally worrying are the severe distortions in input use. India’s fertiliser consumption pattern has become increasingly skewed, with the nitrogen-phosphorus-potassium (N:P:K) ratio deteriorating to 10.9:4.1:1 in 2023–24, far removed from the recommended 4:2:1 balance. The survey attributes this imbalance largely to pricing distortions, particularly the subsidised urea. The consequences are already visible: declining soil organic matter, increased nitrate contamination of groundwater, and a diminishing yield response to fertilisers.

The allied dairy sector, often portrayed as a buffer for rural incomes, is also under strain. Feed and fodder shortages have reached “critical” levels, with demand-supply gaps of 28 to 40 per cent for concentrates, directly affecting productivity and milk yields.

Structural constraints continue to choke the sector. Fragmented landholdings, low capital investment and limited mechanisation remain entrenched problems. Access to irrigation is uneven and crop-specific — while nearly two-third of rice cultivation is irrigated, less than 15 per cent of millet acreage has assured water access. Financial stress is also evident, with the agriculture sector’s gross non-performing asset ratio remaining high at 6 per cent, and its share in total banking NPAs rising in 2025.

The deterioration of village commons — grazing lands and ponds — adds another layer of distress. Encroachment and land degradation now affect nearly 30 per cent of India’s geographical area, eroding traditional livelihood buffers for small farmers.

Policy-induced distortions have compounded these challenges. Administered pricing for maize-based ethanol has encouraged maize cultivation but led to a decline in pulses and oilseeds acreage, raising concerns about nutritional and food security. Frequent trade interventions, including export bans and minimum export prices, have disrupted supply chains and damaged India’s credibility in global markets.

Taken together, the Economic Survey suggests that Indian agriculture remains trapped in a low-efficiency equilibrium. Without a decisive shift from volume-driven input use and ad hoc policy responses to productivity-led, system-wide reforms, the sector’s long-standing vulnerabilities are likely to deepen rather than recede.