The Ministry of Rural Development aims to improve the quality of life in rural areas of the country and acts as the nodal agency for most development and welfare activities in rural India.[i]  The Ministry comprises of two Departments, the Department of Rural Development and the Department of Land Resources. The Department of Rural Development works to enhance employment opportunities, ensure social security for the vulnerable, and facilitate infrastructure development for economic growth in rural areas.¹  The Department of Land Resources works to ensure sustainable development of rainfed cultivable and degraded lands, and optimise the use of land resources in the country.[ii]

This note looks at the proposed expenditure for the Ministry for 2025-26 and trends in budgeting over the years.  It also analyses broader trends in the sector and challenges faced by the Ministry in implementing its programmes.

Overview of Finances

Allocations in 2025-26

In 2025-26, the Ministry of Rural Development has been allocated Rs 1,90,406 crore.[iii]^,[iv]  The Department of Rural Development has been allocated Rs 1,87,755 crore, 8% higher than the revised estimates of 2024-25.³  The Department of Land Resources has been allocated Rs 2,651 crore, 35% higher than the revised estimates of 2024-25.⁴

Table 1: Budgetary Allocation to the Ministry of Rural Development (in Rs crore)

Department	23-24 Actuals	24-25 RE	25-26 BE	% Change*
Rural Development	1,61,932	1,73,912	1,87,755	8%
Land Resources	1,711	1,966	2,651	35%
Total	1,63,643	1,75,878	1,90,406	8%

Note: BE is budget estimate and RE is revised estimate. *% change is change in 2025-26 BE over 2024-25 RE.
Sources: Demands for Grants of the Ministry of Rural Development 2025-26; PRS.

Key Announcements in Budget Speech (2025-26)[v] A Rural Prosperity and Resilience programme will be launched to generate opportunities in rural areas through skilling, technology and investment.  The programme will focus on women, youth, farmers and landless families. Public sector banks will develop Grameen Credit Score framework to serve the credit needs of SHG members and people in rural areas.

State of the rural economy

As of 2021, 65% of India’s population lives in rural areas, and 47% of the people depend on agriculture for livelihood.[vi]  In 2024-25, agriculture sector is projected to see a growth of 3.8%, which is higher than growth rate for the previous fiscal (1.4%).[vii]  However, agriculture has consistently grown slower than overall economy.  Since 2001-02, agricultural output has grown at an average annual rate of 3%, while the rest of the economy has grown at 7% per annum.[viii]^,[ix]  This resulted in agricultural output doubling over this period while remaining part of the economy grew 4.6 times.

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