India backs its farmers: Insurance, prices and resolve against trade pressure

As global trade shocks reverberate across markets, India has responded with a steady mix of policy support, market safeguards, sending a message that its farmers will not be left in the lurch.
September 22, 2025 | 15:13

New Delhi’s approach during the last fiscal year has been oriented toward stabilising rural incomes, sustaining planting decisions, and safeguarding long-term agricultural resilience.

At the heart of India’s domestic safety net is the continuation and strengthening of crop insurance schemes designed to shield millions of cultivators from weather, pest and price shocks.

The Pradhan Mantri Fasal Bima Yojana (PMFBY) and related weather-indexed schemes remain central to that effort, with the central government extending these programmes through 2025–26 and maintaining significant budgetary outlays to ensure rapid claim settlement and broader coverage.

These programmes reduce the downside risk that can force distress sales and underinvestment, encouraging farmers to adopt improved seeds and climate-smart practices with the assurance of protection.

Practical improvements have accompanied policy continuity. The government has taken steps to speed payouts and use digital transfers to reach beneficiaries quickly — a crucial element when rural households depend on timely compensation to repay loans and make next-season purchases.

State and central coordination on procurement and payment, even now, targets efficiencies that limit leakage and ensure farmers receive the full value of insurance and support disbursals.

Fast, reliable payouts foster trust in formal programmes, reduce reliance on costly informal credit, and help stabilise consumption in rural economies.

Guaranteed pricing and procurement programmes continue to buttress farm incomes.

Minimum Support Prices (MSP) for a basket of mandated crops are set annually after consultations, providing a price floor that underwrites farmers’ planning decisions.

Where markets fail to deliver remunerative prices at harvest, public procurement — augmented by state initiatives that streamline registration and payments — gives producers a predictable buyer and prevents distress selling during price troughs.

By anchoring expectations, MSP and procurement systems contribute to agricultural stability even as global commodity markets fluctuate.

India has also scaled up targeted state-level relief measures to address region-specific shocks.

Several states implemented irrigation subsidies, waived interest on water charges, and expanded procurement centres for key crops — measures that directly reduce farmers’ input costs and improve net returns.

These localised interventions complement national insurance and price supports by removing immediate financial stressors and enabling farmers to maintain productive investments.

India combined diplomatic engagement with pragmatic economic measures: pursuing high-level trade talks, exploring market diversification, and accelerating value-addition in export supply chains to reduce vulnerability to a single market’s tariff shifts.

These steps reflect a long-standing strategic stance of diversifying partners and strengthening domestic value chains so that Indian agriculture and allied sectors are more insulated from abrupt policy shocks abroad.

Importantly, Indian policymakers have emphasised that protecting farmers is not about protectionism but about ensuring fairness and continuity for livelihoods that feed the nation.

By cushioning farmers from both domestic and international shocks, India preserves planting incentives — a vital element for food security and rural employment.

The combination of insurance, price floors, procurement, and targeted subsidies forms an integrated safety net that lowers the probability of production shortfalls and supports steady agricultural output growth even in turbulent trade cycles.

India’s strategy also extends to innovation and climate resilience. Accelerated rollout of climate-resilient seeds, expanded drip irrigation subsidies, and investment in weather-based advisory services are intended to reduce yield volatility and input costs over time.

As extreme weather events intensify globally, these measures help farmers adapt and transition toward more sustainable, higher-value cropping patterns — critical for long-term income growth and reduced welfare volatility in rural communities.

Civil society, farmer organisations and state agencies have played constructive roles in shaping these policies.

When central programmes are calibrated with local feedback — for example, by improving registration processes for tenant farmers or increasing the number of procurement centres — the result is greater inclusivity and uptake.

This bottom-up refinement helps ensure that national schemes translate into on-the-ground impact for smallholders, daily wage agricultural workers, and marginal cultivators who represent the bulk of India’s farming community.

Looking ahead, India’s positive momentum rests on three mutually reinforcing pillars: guaranteeing downside protection (insurance and timely payouts), ensuring fair prices (MSP and procurement), and raising productivity and resilience (climate-smart tech and infrastructure).

Together, these pillars secure incomes today and build capacity for higher returns tomorrow.

The government’s willingness to deploy fiscal resources to uphold these pillars — even as it navigates complex global trade disputes — underscores a policy priority that places farmers’ welfare at the centre of economic strategy.

The recent tariff tensions have tested India’s external economic relations, but they have also catalysed renewed focus on domestic resilience.

By doubling down on farmer protections and accelerating reforms that modernise procurement, insurance and climate adaptation, India is reaffirming an important thesis: safeguarding the livelihoods of millions of farmers is essential for national stability and for sustaining the country’s growth trajectory.

In an unpredictable world, India’s multifaceted support system for farmers is not just mitigation — it is forward-looking nation-building.

Tarah Nguyen