PMO Flags Farm Growth Slump, Budget 2026 Expected To Boost Rural Economy

New Delhi, Jan 27 (KNN) The Union Budget 2026 is likely to renew focus on the rural economy, with the Prime Minister Office flagging the recent slowdown in agricultural growth.
 
Sources said farm sector growth has eased from 4.6 percent in 2024–25 to an estimated 3.1 percent in 2025–26, prompting the Finance Ministry to consider Budget measures to revive momentum, reported the Business Line. 
 
Cooperative Farming, Value Addition in Focus
 
A key strategy under consideration is to strengthen cooperative farming and expand value addition across agricultural value chains. The government is expected to promote farmer collectives, upgrade post-harvest infrastructure, and support agro-processing to raise farm incomes and rural jobs.
 
It will also focus on integrating small and marginal farmers through cooperatives and Farmer Producer Organizations to achieve scale, modernise supply chains, and enhance market competitiveness.
 
GVA Share of Agriculture Slips
 
Despite record foodgrain output in recent years, agricultural Gross Value Added (GVA) growth has stayed around 3–4 percent due to the Covid-19 impact and climate disruptions. 
 
While the Economic Survey had projected 5 percent farm growth with a 20 percent GVA share, agriculture’s contribution fell to 17.7 percent in 2023–24 from 20.4 percent in 2020–21, according to the Agriculture Ministry.
 
Allied Sectors Drive Farm Incomes
 
Experts note that allied sectors such as livestock and dairying have become key stabilisers of farm incomes, especially during the drought-hit year of 2024. 
 
The Economic Survey highlighted that livestock contributed 5.5 percent to total GVA in 2023–24, growing at nearly 13 percent Compound Annual Growth Rate (CAGR), with output valued at Rs 17.25 lakh crore in 2022–23.
 
Cooperatives as a Growth Engine
 
The renewed emphasis on cooperatives comes as the National Cooperative Database shows over 8.5 lakh cooperatives as of December 2025, with 6.6 lakh operational and spanning nearly 98 percent of rural India across 30 sectors. 
 
These include farmers, milk producers and fishers, while women-led self-help groups have integrated nearly 10 crore women into the system. Institutions such as Amul, NABARD, KRIBHCO and IFFCO anchor this ecosystem, supported by the National Cooperative Export Ltd, set up to promote cooperative-led exports.
 
Export Push and Strategic Outlook
 
Sources said cooperative farming models and FPOs could be vital amid forecasts of a possible El Niño after July, which may threaten crop output. 
 
They also called for boosting agricultural exports, urging agencies like APEDA to expand market access and help India diversify beyond traditional products. A wider export basket, they noted, could enhance farm incomes and strengthen India’s global standing.
 
(KNN Bureau)