Transition from demand-driven safety nets to integrated rural livelihood platforms.
India’s rural development push is entering a more demanding phase. The Union Budget 2026–27 makes clear that building infrastructure is no longer the main challenge. The harder task now is to keep systems running, protect livelihoods, and manage growing climate and fiscal pressures. How well policies adapt to this shift will shape rural resilience in the years ahead.
The Union Budget this year, signals a turning point in India’s rural development trajectory, as flagship programmes move decisively from rapid infrastructure creation to the harder task of sustaining services and livelihoods. Across drinking water, sanitation, agriculture, irrigation, and rural employment, the budget restores or stabilises allocations after a year marked by significant execution slippages, evident in sharp Budget Estimate–Revised Estimate (BE-RE) divergences in FY 2025–26.
The Union Budget 2026–27 allocates ₹67,670 crore to the Jal Jeevan Mission, bringing funding back to levels seen in earlier years after a sharp drop in the previous budget cycle. In FY 2025–26, allocations fell from a Budget Estimate of ₹67,000 crore to a Revised Estimate of just ₹17,000 crore. At one level, the restored allocation signals that the Union government remains committed to providing piped drinking water to all rural households. At a deeper level, however, it reflects the challenges JJM is now facing as it moves into a new phase.
The drop in spending last year was not because rural water needs had been met or because demand had declined. Instead, it pointed to a shift in what the programme now requires. With most infrastructure already in place, spending is no longer focused mainly on laying pipes or building facilities. It is increasingly needed for source strengthening, water quality monitoring, electricity for pumping, skilled staff to operate systems, and verification of whether household tap connections are actually functional.
These activities are more complex to implement. They depend on the administrative capacity of state governments, timely sharing of costs by states, and the effectiveness of local institutions. Weaknesses in these areas have made it difficult to fully utilise allocated funds.
The 2026–27 budget assumes that these execution challenges can be addressed within the existing design of the programme. However, it does not clearly set aside dedicated funding for operation and maintenance or for long-term source sustainability within JJM.
Overall, the budget places the Jal Jeevan Mission firmly in a consolidation phase rather than an expansion phase. While the restored funding offers room to stabilise services, the future success of the programme will depend less on annual allocations and more on governance reforms, reliable financing for operation and maintenance, and stronger links with measures to protect and sustain water sources.
Swachh Bharat Mission: Financing sanitation sustainability beyond ODF
The Union Budget 2026–27 continues support for the Swachh Bharat Mission, with funding that reflects a clear shift away from building new infrastructure towards sustaining sanitation services, encouraging behaviour change, and improving service quality. For Swachh Bharat Mission–Grameen, the budget allocates ₹7,192 crore, similar to recent years. This confirms that the programme has moved beyond large-scale toilet construction and is now focused on maintaining open defecation free status, managing solid and liquid waste, and strengthening local sanitation systems.
Unlike drinking water programmes, SBM has shown relatively stable funding and better utilisation. In FY 2025–26, Revised Estimates for SBM–Grameen were about ₹6,000 crore, only slightly lower than the Budget Estimate of ₹7,192 crore. This suggests fewer implementation challenges. One reason is the programme’s well-established institutional framework at the Gram Panchayat level, including sanitation committees, incentive mechanisms, and community monitoring.
The budget also highlights an important difference between SBM and the Jal Jeevan Mission. While JJM is still working to address gaps in operation and maintenance financing, SBM has more clearly built long-term sustainability into its design. Going forward, the impact of SBM spending will depend less on higher allocations and more on how well sanitation services are linked with water supply, public health systems, and urban–rural waste management.
Agriculture and irrigation: Stabilising costs without structural transformation
The agriculture allocations in the Union Budget 2026–27 suggest that policy remains focused on stabilising farm costs rather than driving major changes in productivity or climate resilience. The decision to keep PM KISAN funding unchanged at ₹63,500 crore for the third year in a row indicates that income support is now treated as a basic entitlement. Over time, however, this fixed amount loses value as farming costs rise due to higher energy prices, labour shortages, and growing climate uncertainty.
A more significant signal comes from the continued reliance on fertiliser subsidies. At ₹1.70 lakh crore, fertiliser support remains one of the largest items in the budget and is only slightly lower than the revised estimate for FY 2025–26. This shows that the government continues to absorb global price shocks to protect farm incomes. While this helps manage short term risks, it also reinforces long standing problems such as imbalanced nutrient use, declining soil organic carbon, and increasing dependence on chemical inputs, with little financial support for soil restoration or balanced fertilisation.
Irrigation policy in the 2026–27 budget is shaped less by new canal projects and more by the link between energy, water, and agriculture. Large and medium irrigation projects continue under existing commitments, mainly through the Pradhan Mantri Krishi Sinchayee Yojana. At the same time, continued funding for KUSUM and higher investments in renewable energy point to a strategy of reducing irrigation costs through solar pumps rather than expanding or upgrading surface irrigation systems.
This strategy has important consequences. Solar pumps lower fuel costs and reduce dependence on diesel, but without strong water governance they can also speed up groundwater depletion. The 2026–27 budget does not directly address this risk. There are no clear conditions linking solar pump deployment to micro irrigation, crop choices, or aquifer management, missing an opportunity to connect energy support with water sustainability.
PMKSY continues to support irrigation efficiency, restoration of water bodies, and completion of major projects under the Accelerated Irrigation Benefits Programme. However, the budget gives limited attention to deeper resilience measures such as crop diversification, soil moisture conservation, and risk management in rainfed areas. Overall, the focus remains on keeping input costs manageable rather than encouraging water efficient or climate adaptive farming practices.
Rural employment and livelihoods: From safety net to economic platform
The Union Budget 2026–27 signals a major shift in rural employment policy. A new programme, VB G RAM G, has been introduced with an allocation of ₹95,692 crore. At the same time, funding for MGNREGS has been reduced to ₹30,000 crore. Together, these changes suggest a gradual transition rather than a sudden withdrawal from the existing employment guarantee system.
This shift reflects growing concern about the limits of MGNREGS as a demand driven safety net. While it played an important role during economic shocks, its success in creating durable assets and supporting long term livelihoods has varied widely across states. VB G RAM G is designed to place employment within a broader rural development strategy, linking wage work to activities such as watershed regeneration, asset creation, and livelihoods promotion.
The transition, however, carries significant risks. Over nearly two decades, MGNREGS built a strong institutional framework that includes social audits, systems for registering demand, safeguards for wage payments, and grievance redress mechanisms. These features turned it into a rights based programme. The effectiveness of VB G RAM G will depend on whether these protections are retained or weakened. Any loss of transparency or worker entitlements could threaten rural income security at a time of high climate and labour market uncertainty.
The budget does not yet offer clear details on how this transition will be implemented. Key questions remain about eligibility, demand registration, wage rates, fund flows, and accountability. Without early and clear guidance, states may face difficulties in rolling out the new programme, which could disrupt rural employment in the short term.
Livelihoods support under the National Rural Livelihoods Mission adds another layer to this shift. Its allocation has increased to ₹19,200 crore, reflecting continued confidence in self help groups as a way to support self employment, women led enterprises, and income diversification. However, helping households move beyond subsistence will require better market access, skills development, and risk management, all of which depend on strong coordination and state capacity.
WDC-PMKSY 2.0 continues to operate under a multi-year funding framework (2021–26) with an indicative Central share of ₹8,134 crore for treating 49.50 lakh hectares of rainfed/degraded lands. While the Union Budget 2026–27 does not list WDC-PMKSY 2.0 as a separate headline scheme, its annual financing continues through the Department of Land Resources’ Demand for Grants under the PMKSY head, with transfers budgeted around ₹2,482 crore for FY 2026–27. Fund releases and project sanctions reflect ongoing implementation within the multi-year envelope, anchored by enhanced norms and renewed strategic focus on sustainability and livelihoods under the watershed paradigm.
Conclusion
Budget 2026–27 reflects a turning point in rural policy. The focus has shifted from building new infrastructure to making existing systems work better. Drinking water and sanitation programmes are now judged on service quality and reliability. Agriculture policy continues to prioritise cost control over deeper reforms. Rural employment is being redesigned, with both opportunities and risks.
Whether this approach succeeds will depend on how well governments manage implementation, protect worker and farmer interests, and align water and land investments with environmental limits. These outcomes will only become clear over the coming years.