Event Report
Riya Rawat
Introduction
The IMPRI Center for Habitat, Urban, and Regional Studies (CHURS), New Delhi, hosted a panel discussion on February 5, 2025, as part of its 6th Annual Series on the Thematic Deliberations and Analysis of the Union Budget 2025-26. The session, titled Rural Realities and Union Budget 2025-26, focused on the challenges and opportunities facing rural India, particularly in the context of the government’s budgetary proposals and their potential impact on agriculture, rural employment, and development.
The panel featured esteemed experts who provided critical insights into the state of rural India and discussed the implications of the Union Budget on various sectors. The event was chaired and moderated by Dr J. Dennis Rajakumar, and the panelists included Prof. R.S. Ghuman, Prof. CSC Sekhar, Prof. Anant Kumar, Dr Jawed Alam Khan, Prof. Gummadi Sridevi, Mr Ramanjaneyulu GV, and Ms Purvi Thangaraj.
Nominal Growth and Sectoral Trends by Dr J. Dennis Rajakumar
Dr J. Dennis Rajakumar, Director at the Economic and Political Weekly Research Foundation, highlighted the disparities between nominal and real GDP growth rates. He noted a sectoral growth of 3.8%, with agriculture, livestock, and forestry showing significant progress. However, other sectors are expected to underperform. Public administration also saw a growth boost. A key takeaway was the remarkable rise in labor force participation, particularly among rural women, where female participation increased from 18.2% to 35.5%. Dr. Rajakumar also raised concerns over stagnant real wages from 2019-20 and stressed the importance of providing an impulse to overall growth.
Despite the allocation of ₹1.88 lakh crore to the Rural Development Ministry, there was disappointment in the unchanged funding for MGNREGA, which remains at ₹86,000 crore. Panelists stressed the necessity of a stronger push to boost rural employment and agriculture, even as they questioned the reluctance to increase funding for critical schemes.
Agricultural Development and Policy by Prof. CSC Sekhar
Prof. CSC Sekhar, Professor at the Institute of Economic Growth, emphasized the importance of addressing the systemic challenges in rural agriculture. He spoke in favor of the Dhan Dhanya Krishi Yojana and its potential to improve agricultural processes. However, he criticized the lack of an integrated vision for rural development across districts and urged for better coordination between ministries. He also advocated for a national mission on high-yield variety (HYV) seeds and a focus on improving seed availability.
Prof. Sekhar expressed concern about the practical difficulties of procuring pulses and the fiscal burden this might impose. Additionally, he called for a more integrated approach between rural and agricultural policies, citing the National Rural Livelihoods Mission (NRLM) as a good example of such integration.
Challenges in Rural Sector and Agricultural Income by Prof. Anant Kumar
Prof. Anant Kumar, from the Xavier Institute of Social Service, critiqued the government’s response to declining farmer earnings and uncertain global markets, particularly the impact of changes in U.S. leadership on agricultural exports. He lamented the lack of concrete plans for rural market linkages, storage, and price stabilization, and argued that the government is largely focusing on outdated schemes rather than addressing the real issues facing the rural economy. He suggested that the existing frameworks, such as the National Research Centre for Makhana, should be strengthened rather than creating new institutions. P
rof. Kumar also pointed out that public investment in agriculture has decreased since 2016-17 and questioned the effectiveness of promises to increase farmers’ income. He expressed concerns about migration from rural areas, with farmers struggling to find labor and financial resources.
Rural Employment and Infrastructure Gaps by Prof. R.S. Ghuman
Prof. R.S. Ghuman, a Professor at Guru Nanak Dev University, provided an in-depth analysis of the rural economy, noting that rural areas contribute to 45-46% of India’s GDP, despite having 70% of the workforce. He highlighted the persistent rural-urban divide and the lack of improvement in living standards, particularly in infrastructure, education, and health services. Prof. Ghuman warned that the decrease in agricultural employment is not being matched by adequate growth in non-farm employment, leading to an increase in migration, disguised unemployment, and the formation of slums. He called for greater focus on the real issues affecting rural areas, including minimum support prices (MSP), marketing, and crop diversification, particularly in states like Punjab and Haryana.
Environmental Sustainability and Rural Livelihoods by Dr G.V. Ramanjaneyulu
Dr G.V. Ramanjaneyulu, Executive Director of the Centre for Sustainable Agriculture, emphasized the need for sustainable farming practices and a more holistic approach to increasing farmers’ income. He critiqued the government’s reliance on high-input-intensive agriculture, which is depleting natural resources like soil and groundwater. Dr Ramanjaneyulu called for a diversified livelihood strategy, stressing that a single crop model is unsustainable in the long term. He also pointed out the need for better monitoring of schemes like PM Kisan, which continues to be criticized for gaps in coverage and a lack of transparency in fund distribution.
Women in Agriculture and Gender Equity by Prof. Gummadi Sridevi
Prof. Gummadi Sridevi, Professor at the University of Hyderabad, highlighted the key role women play in agriculture, which is crucial for empowering rural women. She noted the increasing challenges faced by female workers in the agricultural sector, such as land degradation and climate change. Prof. Sridevi emphasized the importance of integrating gender-focused policies into agricultural and rural development frameworks. She also pointed out that the budget falls short of addressing nutrition security and women’s empowerment, particularly through the Poshan 2.0 scheme, which still sees significant gaps in child nutrition and maternal health.
Policy Gaps and Fiscal Space by Ms. Purvi Thangaraj
Ms. Purvi Thangaraj, a policy researcher at ICRIER, questioned the lack of bold reforms and new initiatives in the budget. She raised concerns about the disproportionate focus on food and fertilizer subsidies over agricultural subsidies. She also pointed out the skewed distribution of resources and the absence of an integrated action plan for rural and agricultural sectors. Ms. Thangaraj called for more investment in research and development in agriculture, emphasizing that the sector is taking more input but yielding lower outputs. She also highlighted the importance of addressing the depletion of natural resources and the need for climate resilience in policy planning.
Fiscal Accountability and Rural Budgeting by Dr Jawed Alam Khan
Dr Jawed Alam Khan, Senior Fellow at the CBGA, underscored the lack of participatory planning in the budget process. He criticized the low fiscal space and the decreasing capacity of the government to absorb allocated funds. Dr Khan emphasized that rural development policies need a more focused approach, with greater attention to MGNREGA, NRLM, and national social assistance programs. He also highlighted the issue of poor budget absorption capacity and the need for improved convergence between central and state departments, as well as better systemic capacities to manage allocated funds effectively.
Way Forward
The panel discussions on the Union Budget 2025-26 highlighted both opportunities and challenges for rural and agricultural sectors. Positive aspects of the budget include the increased allocation for rural development, the significant focus on low productivity and employment through schemes like the Kisan Credit Card (KCC), and initiatives such as the establishment of the Makhana Board in Bihar and the Atma Nirbhar Bharat mission for pulses. These steps demonstrate a clear intent to support rural livelihoods and enhance food security, which are crucial for long-term prosperity.
However, concerns were raised about the lack of integration across ministries and sectors, particularly regarding the real issues faced by farmers, such as inadequate market linkages, declining agricultural incomes, and insufficient focus on crop diversification. While there are positive provisions, such as the increased KCC limit, the unchanged allocation for MGNREGA and the absence of substantial reforms in rural employment were seen as potential setbacks.
Moving forward, it is essential to focus on livelihood-based subsidies, strengthen the coordination between various departments, and address systemic issues such as low absorption capacity of allocated funds. Increased investments in sustainable agriculture, improved training for farmers, and better infrastructure for market access are critical. Additionally, prioritizing gender empowerment and creating pathways for greater female participation in agriculture will further boost inclusive growth in rural areas.
The creation of a Parliamentary Standing Committee on agriculture could play a pivotal role in overseeing the execution of these policies and ensuring accountability. Overall, while the budget offers several promising initiatives, the next steps should be aimed at building a more integrated, sustainable, and inclusive approach for rural development.
IMPRI’s 6th Annual Series of Thematic Deliberations and Analysis of Union Budget 2025-26
Rural Realities and Union Budget 2025-26
Acknowledgement: This report is written by Riya Rawat, a research intern at IMPRI.
