India’s agriculture sector faces a multifaceted “Grand Challenge:” Ensuring food security for a growing population, supporting rural livelihoods, and managing the adverse impacts of climate change, all while contending with limited resources, financial constraints, and the need to reduce greenhouse gas emissions. Addressing these challenges necessitates a transition toward sustainable agriculture.

This report introduces a comprehensive sustainable agriculture framework developed using a value-chain approach to analyze relevant sectors, activities, policies, and key initiatives. It provides a detailed examination of financial flows in the agriculture sector during FY1 2020–21 and FY 2021-22, offering insights into public and private finance sources, intermediaries, and end-use activities across the entire agriculture value chain.

By mapping financial flows and highlighting investment opportunities, this report serves as a roadmap for stakeholders—including policymakers, regulators, and private investors—to transform challenges into opportunities. It aims to inspire collaborative efforts, from publicprivate partnerships to intergovernmental and intragovernmental initiatives, to mobilize finance and advance sustainable practices in India’s agricultural landscape.

KEY FINDINGS

1. Overall financial flows slightly declined amid growing agricultural needs.

Annual financial flows to sustainable agriculture averaged INR 22,393 billion (USD 301 billion) for FY 2020-22. This was characterized by a 1.1% decline from INR 22,474 billion (USD 303 billion) in FY 202021 to INR 22,312 billion (USD 299 billion) in FY 2021-22. 

However, India’s food demand is likely to increase to around 400 million tonnes by 2050 (Indian Agricultural Research Institute 2013), while production levels in FY 2022-23 were around 330 million tonnes (PIB 2023), translating to a five-year average growth requirement of approximately 4%.

2. Private financing via commercial financial institutions (FIs) took the lead.

Private finance accounts for 67% of the total finance flows during FY 2020-21 and FY 2021-22.

It increased 11.4% over this period, averaging INR 15,054 billion (USD 202 billion).

Commercial FIs led the bulk of disbursements (99.5%) through loans primarily due to the Reserve Bank of India’s (RBI’s) priority-sector lending guidelines that mandate banks and other FIs to have 18% of their adjusted net bank credit or credit equivalent of off-balance sheet exposures in credit for agriculture and allied activities. During this two-year period, the total agriculture credit disbursed by FIs in India amounted to INR 34,387 billion (USD 462 billion), averaging INR 17,194 billion (USD 231 billion) each year (Department of Agriculture and Farmers Welfare 2023).

3. Domestic sources far outweighed international.

Domestic sources represented 99.5% of flows (INR 22,289 billion), with international sources contributing only 0.5% (INR 105 billion). This stark disparity reflects global trends, where Official Development Assistance (ODA) for agriculture is limited and fragmented, representing just 5.2% of total ODA globally as of 2018 (Bharali et al. 2021). This highlights the challenge of mobilizing international support to complement domestic resources and to further unlock value through capacity building, technical assistance, and other mechanisms for the development of sustainable agriculture in India.

4. Government budgets are supporting sustainability in the agriculture sector.

Union and state governments in India allocated an annual average of INR 7,294 billion (USD 98 billion) to agriculture during FY 2020-21 and FY 2021-22 (RBI 2023), of which INR 6,373 billion (USD 86 billion) went to the sustainable agriculture activities tracked by this study, mainly upstream and downstream activities.

Government budgetary expenditure was the leading source of public finance. 

Downstream activities—specifically the storage and market sector—received the highest share of government budgetary expenditure (48%) in FY 2020-21.

Over the broader period of FYs 2020-21 and 2021-22, upstream activities received the most government budgetary expenditure for sustainable agriculture, averaging 54% per year.

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