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Incentivizing Regenerative Agriculture: India’s Debut in Soil Carbon Credit Transfers

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The government has operationalized a direct benefit transfer (DBT) mechanism to reward smallholder farmers for carbon sequestration, marking a shift toward climate-resilient agricultural policy.

The Indian government has taken a significant step toward integrating climate-smart agriculture with financial incentives by launching its first Direct Benefit Transfer (DBT) for soil carbon credits. By disbursing over ₹2.9 crore to 2,550 smallholder farmers across Punjab and Haryana, the initiative seeks to formalize the role of the agricultural sector in national carbon sequestration efforts. This policy intervention targets the adoption of regenerative agricultural practices, specifically Direct Seeded Rice (DSR) and reduced tillage. These methods are scientifically proven to enhance soil organic carbon levels while simultaneously mitigating methane emissions—a critical concern in paddy cultivation. By moving beyond traditional input-based subsidies, this model shifts the focus toward outcome-based payments, rewarding farmers for the environmental services they provide.

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