Kerala's Agriculture Minister P Prasad said today that the state government strongly rejects suggestions made by the Union Finance Ministry's Department of Expenditure that Kerala review and discontinue incentive support for paddy cultivation.
The directions contained in the letter were "not acceptable", Prasad told reporters and asserted that Kerala will not compromise on paddy cultivation, which he described as central to the state's food security policy.
"I strongly reject the suggestions in this letter and formally register my protest," the minister said. Any attempt to discourage paddy farming would adversely affect farmers and the state's long-term food security, he added.
What Centre's letter said
The controversy stems from a letter dated January 9, 2026, written by the Secretary, Department of Expenditure, Ministry of Finance, to Dr A Jayatilak, the Chief Secretary of Kerala.
In it, the Union government flagged that bumper production of rice and wheat in recent years has led to foodgrain stocks far exceeding buffer norms and welfare requirements, resulting in a growing fiscal burden due to procurement, storage and handling costs.
The letter cautioned that state-level bonuses paid over and above the Minimum Support Price would lead to surplus stocks and increasing the pressure of subsidy on the state.
Prasad questioned how agriculture bonus can become a burden and took on the stance of the Union government.
The Department of Expenditure has also pointed to the environmental and sustainability challenges associated with rice and wheat cultivation -- describing them as water- and fertiliser-intensive crops with long-term implications for soil health, groundwater levels and climate resilience.
At the same time, the Centre highlighted India's continued dependence on imports of pulses and edible oils, urging states to gradually shift incentives towards pulses, oilseeds and millets to improve nutritional security and reduce import dependence.
A senior bureaucrat associated with the Agriculture Minister said Kerala is currently producing around 21 per cent of its total rice requirement, and the state's policy objective is to raise this to 30 per cent in the coming years.
The official said withdrawing or discouraging incentive support such as the paddy bonus at this stage would impede Kerala's self-sufficiency roadmap. "Any move to remove the bonus now will negatively impact farmer confidence and lead to a sharp decline in rice cultivation, with serious consequences for food security," the bureaucrat said, warning of a possible reversal of recent gains in paddy production.
Budget context and diversification push
The Centre's position is also linked to the broader policy direction outlined in the recent Union Budget, which increased the overall allocation for agriculture and allied sectors by around 7 per cent, taking the total outlay to about Rs 1.62 lakh crore.
The Union budget reinforced a national push towards crop diversification, particularly for pulses, oilseeds and millets, through ongoing missions aimed at improving protein availability, reducing edible oil imports and promoting sustainable farming practices.
Kerala, however, maintains that diversification must not come at the cost of weakening support for staple crops in states that remain heavily dependent on external foodgrain supplies.
"I welcome schemes to grow millets and pulses. In fact, in every district we have created millet centres. But that does not mean paddy bonus should suffer. This move is suspicious," he said.
