By – Dr. Ubaid Mushtaq, Assistant Professor of Economics and Safia Iffath
(Student) Department of Economics, Easwari School of Liberal Arts,
SRM University-AP ( Amaravati)
The Union Budget 2026–27 arrives at a moment when economic certainty is hard to come by. Global trade remains unsettled, geopolitical tensions persist, and financial conditions are increasingly cautious. Against this backdrop, the Budget seeks to offer reassurance. It emphasises stability, continuity, and long-term ambition within the broader Viksit Bharat 2047 vision. In many respects, it succeeds in doing so.
Capital expenditure has once again been raised, to ₹12.2 lakh crore, nearly 9 per cent higher than last year, underlining the government’s commitment to public investment as the primary engine of growth. This choice is pragmatic. Despite strong corporate balance sheets, private corporate investment has remained subdued in recent years, hovering around 11.5–12.5 per cent of GDP, well below the mid-2000s peak of nearly 16 per cent. In such a context, sustained public investment helps maintain growth momentum and signals policy confidence. The Budget also continues on a path of fiscal restraint. The steady reduction in the fiscal deficit reinforces macroeconomic credibility, an important achievement at a time when many economies are grappling with debt and inflationary pressures. Stability, in this sense, is not merely a rhetorical claim but a deliberate policy objective.
Yet some of the most consequential choices in the Budget are not found in the headline numbers, but in the quieter shifts in emphasis, particularly in how agriculture and rural development are approached.
Agriculture: present, but not central
On paper, agriculture has not been overlooked. The allocation for agriculture and allied sectors stands at around ₹1.63 lakh crore, marking a modest increase over the previous year. In her speech, the Finance Minister highlighted the growing importance of allied activities, including animal husbandry, dairy, fisheries, coconut, sandalwood, walnuts, and almonds. These sectors offer real opportunities for diversification, value addition, and non-farm employment in rural areas, and their inclusion reflects an effort to move beyond a narrow focus on traditional crop production.
This emphasis deserves recognition. A more diversified rural economy can reduce risk and open up new income streams, particularly in regions where agriculture alone can no longer absorb labour. At the same time, the relative absence of the crop sector from the Budget narrative is hard to miss. Core issues that continue to shape farmers’ lives, price volatility, rising input costs, irrigation stress, climate uncertainty, and uneven access to markets, receive limited attention. Even horticulture, often presented in recent years as a bridge between traditional farming and high-value agriculture, figures only marginally. This does not necessarily suggest neglect. Instead, it points to a shift in how rural development is being imagined, away from direct public intervention in crop agriculture and toward diversification and market-led adjustment.
From public support to private adjustment
This shift becomes clearer when one looks at how agricultural investment is being supported. Unlike infrastructure, where investment flows largely through direct budgetary spending, support for agricultural and rural development is channelled through indirect mechanisms, such as interest subventions on loans and credit-linked incentives.
For some farmers, especially those with land, capital, and access to markets, this approach can work well. Credit can enable investment, diversification can spread risk, and integration with value chains can raise returns. The Budget’s focus on enabling such transitions reflects an optimism about rural entrepreneurship and adaptability. But for many small and marginal farmers, this model quietly transfers risk. When investment depends on borrowing, uncertainty becomes personal. Weather shocks, price fluctuations, or rising input costs are no longer absorbed by public systems but by individual households. In this setting, resilience is expected rather than built. What is notable about the Budget is not that it withdraws support from agriculture, but that it redefines the form of that support. The state increasingly positions itself as an enabler rather than a provider, encouraging farmers to adjust through credit, diversification, and market participation. This may represent a new phase of rural policy, one that places greater faith in individual adaptation than in collective protection.
Welfare as reassurance, not transformation
Welfare schemes continue to play an important role Budget’s broader approach to rural development. They help stabilise consumption, cushion shocks, and prevent deeper distress. The Union Budget 2026–27 reiterates this role through measures such as the Prime Minister Dhan Dhanya Krishi Yojana, higher Kisan Credit Card limits, and targeted interventions like the Makhana Board in Bihar. In an economy where agriculture still supports a large share of the workforce, such initiatives offer necessary reassurance in uncertain times.
At the same time, welfare increasingly functions as a safety net rather than a pathway to lasting livelihoods. Schemes are announced and extended, but their impact is often limited by uneven execution. In the previous year, only a few major programmes, most notably MGNREGA and the PM Garib Kalyan Anna Yojana, exceeded their budgeted allocations, while several others saw significant underutilisation. The Jal Jeevan Mission, for instance, was allocated ₹67,000 crore but spent only about ₹17,000 crore in the revised estimates. These gaps suggest that welfare often provides short-term relief without fundamentally changing the conditions that generate rural vulnerability. To the government’s credit, the Budget resists populist pressures and keeps a firm eye on fiscal sustainability. This restraint strengthens policy credibility and preserves space for future action. Yet restraint also has consequences. When growth is driven largely by capital-intensive infrastructure and rural development leans increasingly on credit and self-adjustment, the task of managing uncertainty shifts downwardto farmers and rural households.
The larger question
What distinguishes the Union Budget 2026–27, then, is not that agriculture has been sidelined, but that rural India is being asked quietly to do more of the adjusting. To borrow, diversify, innovate, and absorb shocks, while the state focuses on maintaining macroeconomic stability and enabling growth from a distance. This is not necessarily an unworkable vision. But it is an incomplete one. Credit cannot substitute for price stability. Allied sectors cannot absorb all rural labour. And welfare, however necessary, cannot replace secure and predictable incomes. The Budget offers stability, coherence, and ambition. Its real test will be whether this stability extends beyond fiscal indicators and into the everyday economic security of rural households
(Ubaid Mushtaq is an Assistant Professor of Economics, and Safia Iffath is a final-year undergraduate student of Economics, at SRM University–AP)
