Punjab and Haryana have long played a pioneering role in shaping India’s agricultural transformation, when it was needed the most. With the adoption of input-intensive technologies during the Green Revolution, Punjab emerged as the leader in transforming Indian agriculture during the 1970s and 1980s, with Haryana following closely. This transformation led to a substantial increase in wheat and rice productivity, thereby significantly strengthening government procurement of these staple crops and ensuring food security of the country. Further, India has emerged as the largest producer of rice in the world and also the largest exporter with a share of 40 per cent in global exports of rice during Marketing Year 2025 (USDA, 2026). At the same time, the environmental costs of sustaining national food security have been substantial. Intensive paddy (rice) cultivation practices have placed severe stress on natural resources, leading to the degradation of land and depletion of groundwater in both states. Yet, farmers continue to grow this crop due to profitability and its assured procurement from the government.
Rice is a very water, greenhouse gas (GHG) and fertiliser-intensive crop in this region. The subsidies, both from the Government of India (GoI) in the form of fertiliser and state governments in the form of power, irrigation and machinery, are heavily skewed in favour of paddy cultivation. This is due to high consumption of fertilisers, irrigation water, and electricity for groundwater extraction during paddy cultivation. Our analysis indicated that during the crop year 2022–23, paddy received per-hectare input subsidies at about ₹40,577 in Punjab and ₹52,388 in Haryana. By comparison, support for oilseeds remained much lower at ₹8,685 per hectare in Punjab and ₹9,859 per hectare in Haryana, while pulses received ₹6,382 per hectare in Punjab and ₹7,430 per hectare in Haryana. This situation analysis led us to explore possibilities of providing incentives to farmers by repurposing the existing subsidies that are currently being provided for paddy cultivation by the GoI and state governments. During the course of interactions with the farmers and other stakeholders, as well as an in-depth analysis of the data for electricity consumption, fertiliser consumption, water consumption, profitability analysis and market risks, we were able to establish three things. First, an upfront incentive of about ₹35,000 per hectare (GoI and state governments in the ratio of 50:50) plus carbon credit (as per the market cost, at least 15-20 US$ per tonne of GHG emission) is likely to encourage farmers to make a switch from paddy to alternative Kharif crops in Punjab and Haryana. Second, in addition to the upfront incentives, assured procurement of alternate crops by governments at Minimum Support Price (MSP) at par with paddy would be required to cover market risk of the farmers. Third, availability of high-yielding varieties (HYVs) of alternate crops, viz., maize, fruit crops, oilseeds and pulses would ensure the profitability of these crops and thus the success of crop diversification in 8-15 lakh hectares of non-basmati rice areas of Punjab and Haryana. Interestingly, this expenditure on incentivising legumes or other alternative crops is not an additional expenditure, but only repurposing the existing subsidies to create crop-neutral incentives. The only thing needed is cooperation between the GoI and the state governments on a 50:50 basis to foot the bill upfront, and as farmers shift from paddy to alternative crops, the savings in fertiliser subsidy will accrue to the GoI and savings in power and irrigation subsidy will flow to the states.
