New Delhi: The government has sharply front-loaded farm spending this year, seeking to cushion rural incomes and demand as El Nino and a weak monsoon raise risks for agriculture. It spent more than a fifth of its annual agriculture allocation in the first quarter of the financial year 2027 (FY27), more than twice the pace a year ago, according to government data reviewed by Mint and two officials. In the farm focus, the spending on fertilizers has also seen an acceleration.
Typically, government spending picks up towards the latter half of the fiscal.
Against its full-year allocation of ₹1.41 trillion, the agriculture and farmers welfare ministry spent 21%, or ₹29,593 crore, during April-June, according to department of expenditure data. In comparison, it had spent 9%, or ₹12,297 crore, in the same period last year against the fiscal’s ₹1.38 trillion allocation.
The move aims to ensure that farmers have timely access to income support, subsidized inputs, crop insurance, credit and farm infrastructure, to help limit the impact of adverse weather on farm incomes and, in turn, overall rural consumption.
The faster pace of spending comes alongside the Centre’s preparations for a weak and uneven monsoon, including contingency plans for vulnerable districts and measures to ensure the availability of seeds, fertilizers and fodder.
The agriculture and allied sectors account for about 16% of India’s gross domestic product (GDP), with nearly 46% of the country’s workforce dependent on agriculture.
“It’s one among several ways to respond to the emerging risks in agriculture and ensure that critical interventions such as farm support, inputs and infrastructure are not constrained by delayed fund availability,” said one of the officials cited above.
The farm spending was led by the department of agriculture and farmers welfare, which spent ₹26,627 crore during the June quarter. The department of agricultural research and education accounted for another ₹2,966 crore. Together, they accounted for the ministry’s total ₹29,593 crore spending in April-June.
Latest India Meteorological Department (IMD) data shows India had a cumulative monsoon deficit of 12% as of 2 August. The weather office has cut its forecast for this year’s south-west monsoon rain to 90% of the long-period average, down from 92% projected earlier. On the drought situation, replying to a Lok Sabha query on 12 August, minister of state for earth sciences Jitendra Singh said 47% of India’s districts faced deficient or large-deficient rains as of early August.
Experts say front-loaded farm spending is the right move in the current context.
“The early acceleration in agricultural spending is a positive for rural demand and suggests the Centre is getting ahead of potential farm-sector risks, rather than waiting for a rural slowdown to emerge,” said Madhavi Arora, chief economist at Emkay Financial Services Ltd.
Beyond the larger amount, what is crucial is where the money is being spent. “The key question, however, is not just how much is being spent, but where the money is going. If the front-loading is reaching farmers and rural infrastructure, it could provide a meaningful floor to rural consumption in FY27,” Arora said.
The broader expenditure pattern also shows higher quarterly spending in agriculture-linked areas. The department of fertilizers spent ₹64,753 crore, or 38% of its FY27 allocation, by June, compared with 26% in the year ago period.
“This is important for the farm economy because timely spending can help address emerging risks before they translate into lower farm incomes. With weather uncertainty high, early deployment of funds gives the government greater room to respond to crop and input-related challenges,” added Rakesh Arrawatia, professor at the Institute of Rural Management Anand (Irma) and dean at the School of Cooperative Banking and Finance.
Queries emailed to the spokespersons of ministries of finance, agriculture and farmers welfare, and the department of fertilizers remained unanswered until press time.
In June, the Centre had warned of the possibility of the El Nino weather phenomenon—which typically brings weak rains in India—and a weak or uncertain monsoon, and had rolled out contingency plans covering 315 vulnerable districts. The plans include promoting short-duration and less water-intensive crops, strengthening water conservation and ensuring the availability of seeds, fertilizers and fodder.
Fertilizer focus
“A key driver of the higher overall expenditure is the sharp increase in fertilizer subsidy outgo. Urea subsidy expenditure has risen by 18 percentage points to 45% of the FY27 budget (of the ₹1.77 trillion total subsidy payout) estimate by June, from 27% a year ago, while nutrient-based fertilizer subsidy expenditure has risen by three percentage points from 19% in the previous year,” said Ranen Banerjee, partner and leader for economic advisory at PwC India.
With disruptions from the ongoing West Asia war spiking urea prices from ₹2,900 per 45 kg bag to ₹4,300, the fertilizer department had proposed doubling its subsidy to ₹3.54 trillion for the current fiscal from the budgeted ₹1.77 trillion.
remains one of the largest components of the government’s support to the farm sector, with the department’s bill for India crossing ₹2.17 trillion in FY26.
“The higher subsidy bill proposal reflects elevated fertilizer prices amid the Middle East conflict. If global fertilizer prices do not ease before the rabi sowing season, the government could face a significant need for supplementary budgetary provisions for these expenditure heads,” Banerjee said.
The government has also stepped up support for farm inputs. For the ongoing kharif crop season, the Union Cabinet has approved a tentative ₹41,534 crores for nutrient-based subsidy on phosphatic and potassic fertilizers, around ₹4,317 crore higher than year-ago requirement. The move was aimed at ensuring fertilizer availability at affordable prices amid changes in global input prices.