Indian agriculture is inherently vulnerable to a number of risks from sourcing inputs to sale of crop output in the form of adverse weather, market prices, pest attack etc. In addition, climate change catalysing increased extreme weather events has also been adversely impacting the agricultural production in the country.March and April 2022, for instance, saw an unusual increase in maximum and minimum temperatures, with northwest and central regions of India experiencing the hottest April in 122 years. As a result, yields of major crop in the region declined significantly – about 10-34% down in wheat, 19% in chana, 18% in maize and 14-18% in mustard, according to the India Fourth Biennial Update Report submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2024. Further, India ranked as the sixth most-affected country in the world as per the Climate Risk Index 2025, published by the Germanwatch in February 2025. During 1993-2022, India witnessed over 400 extreme weather events that resulted in loss of about USD 180 billion and over 80,000 fatalities, according to the report.Such a scenario calls for urgent measures to prioritise and promote climate change adaptation and resilience in Indian agriculture in order to protect the income and livelihood of farmers as well as ensure the nation’s future food security.Also read: The Corporate Hijack of Agriculture Is India’s Actual Agrarian CrisisTowards this, there is a need to mobilise adequately the requisite amount of climate finance for climate change adaptation of Indian agriculture.A global effort requiredGlobally, as well as domestically, the major focus of climate finance flows and action has been on mitigation, particularly in energy and transport sectors, considering their larger contribution to emissions as tracked till 2022. Meanwhile, the flow of funds to the agriculture, forestry and land use (AFOLU) sector, as of 2020-21, stood at about only 1.9% of the total global climate finance flows, according to the T20 Policy Brief on Financing Climate-Smart Agriculture for Sustainable Agri-Food Systems.Further, as per an indicative estimate by International Fund for Agricultural Development (IFAD), the gap in climate financing to ensure small-scale farmers’ adaptation to climate change is about USD 75 billion per year in developing countries.While the Paris Agreement provides equal weight to both mitigation and adaptation actions, India clearly indicated that the national circumstances demand the first priority for climate change adaptation in the ‘Report of the Sub-Committee for the Assessment of the Financial Requirements for Implementing India’s Nationally Determined Contribution’ (NDC). In this regard, the cumulative total expenditure for adapting to climate change in India is estimated to be Rs 85.6 lakh crore (2011-12 prices) by the year 2030, according to the Report on Currency and Finance 2022-23 Towards a Greener Cleaner India by the Reserve Bank of India (RBI). On the other hand, the National Adaptation Fund for Climate Change (NAFCC), established in 2015 to support adaptation activities in the country, has spent about Rs 847 crore since its inception, according to the fund’s implementing agency, National Bank for Agriculture and Rural Development (NABARD). The budgetary allocation of NAFCC declined substantially and it was made a non-scheme in November 2022.There are no comprehensive estimates available on the status of climate finance flows for adaptation actions in the country. However, a partially tracked estimate covering disaster risk management, flood and cyclone mitigation, drought management, agriculture related to on-farm adaptation-related activities stood at around Rs 1,092 billion in 2021-22, according to the Landscape of Green Finance in India 2021/22 by the Climate Policy Initiative (CPI). Within the tracked adaptation finance in the agriculture sector, on-farm adaptation-related activities received about Rs 265 billion in 2021-22, accounting for about 24% of the total climate finance. Among the activities covered for tracking within agriculture, crop insurance accounted for a major part with 58% of finance followed by efficient irrigation with 19%, resilient cropping systems with 14%, research and capacity building with 6% and soil and water conservation with 3% of the finance in 2021-22.Also read: Our Rural Policies Deserve a Transformational ShiftIn terms of sources of finance, the public sector accounted for the majority of adaptation for agriculture at Rs 262.3 billion, while the private sector accounted for an average of only Rs.2.7 billion per year, according to CPI. Moreover, a large part (nearly 80%) of private sector investments in agriculture go to start-ups providing digital infrastructure for establishing input and output market linkages, whereas only a limited (less than 20%) of investments go to research and development for climate change adaptation in agriculture, as per a report of McKinsey & Company in 2023. The apparent significantly low flow of private sector investments to agricultural research and development is due to the lack of revenue generation potential from the dominant smallholder farmers.Thus, there is an urgent need to scale-up mobilisation of adaptation finance in agriculture from public sector, particularly for promoting research and development. Such measures are vital to fill the substantial finance gap in climate change adaptation in agriculture to ensure incomes and protect livelihoods of smallholder farmers, while ensuring the future food security of the country’s steadily growing population.It is essential to prioritise funding for climate change adaptation, especially considering the long duration required for the process of development, testing and adoption of suitable agricultural technologies, climate change resilient crop varieties and cultivation practices. In order to meet the substantial requirement of funding for adaptation, it is essential to tap all the potential sources of funds, including public and private sectors and judiciously use them for promoting climate resilience in Indian agriculture. Amarender Reddy is the joint director, School of Crop Health Policy Support Research (SCHPSR), and ICAR-National Institute of Biotic Stress Management (ICAR-NIBSM), Raipur.Tulsi Lingareddy is a senior economist in Sustainable Finance and Agriculture. Views expressed are personal.
