Reform Express and India’s Farm Economy Test

Reform momentum and growth signals

Reform Express and India’s Farm Economy Test: Prime Minister Narendra Modi has projected the third term of his government as a phase of accelerated reforms under the “Reform Express” narrative. Policy actions in taxation, labour laws, trade agreements, and welfare restructuring indicate a strong macroeconomic push.

Advance projections indicate robust GDP expansion and low consumer inflation, reflecting stability at the macro level. However, macro indicators alone do not reflect the structural health of the economy. The farm sector remains the most vulnerable pillar in this growth story.

Agriculture as the structural weak point

Agricultural growth remains significantly lower than headline GDP growth. Declining food prices, while beneficial for consumers, have reduced farm incomes and weakened rural demand.

Price deflation in vegetables, pulses, and cereals has directly affected farmer earnings. In several regions, pulses and vegetables have traded below MSP benchmarks, creating income stress.

Static GK fact: Agriculture supports nearly 42% of India’s workforce, but contributes less than 18% of GDP, making income stability in farming structurally fragile.

Subsidy-driven crop distortion

India’s cropping pattern is shaped less by market demand and more by policy incentives. Free power, cheap urea, and assured procurement have created a structural bias towards rice, wheat, and sugarcane.

This subsidy ecosystem discourages farmers from shifting to pulses, oilseeds, and horticulture. These crops are nutritionally critical and environmentally sustainable, yet remain economically risky for farmers.

Static GK Tip: Rice and wheat together occupy over 40% of India’s gross cropped area, reflecting long-term policy bias.

Food subsidy burden and systemic inefficiency

The food subsidy architecture is built around the economic cost model of the Food Corporation of India and distribution through the PDS network.

Under the PM Garib Kalyan Yojana, over half the population receives free food grains. While digitisation and point-of-sale systems have reduced leakage, coverage scale remains the core challenge.

Static GK fact: India operates the largest food distribution system in the world, with more than five lakh fair price shops.

This creates a paradox where farmers sell crops to the state and later receive the same crops as free entitlements, increasing fiscal cost without raising net incomes.

Fertiliser subsidy and ecological damage

Fertiliser subsidy remains one of the largest budgetary outlays in India. Urea price control has led to nutrient imbalance, excessive nitrogen usage, and declining soil health.

Subsidy leakages, environmental damage, and inefficient nutrient use reflect structural policy failure rather than welfare success.

Static GK fact: India is the second-largest fertiliser consumer globally, after China.

Decontrolling fertiliser pricing and shifting towards direct benefit transfers can align farmer choice with soil health and productivity goals.

The real reform test

Sustainable reform lies in shifting from price distortion to income support. Integrating food and fertiliser subsidies into direct income frameworks like PM-Kisan would remove market distortions.

This would allow farmers to respond to real demand signals, promote crop diversification, and reduce fiscal leakage. The credibility of “Reform Express” will ultimately depend on whether subsidy politics gives way to structural agricultural reform.

Static Usthadian Current Affairs Table

Reform Express and India’s Farm Economy Test: