Connectivity, not crops, now sets the price of India’s farmland

India’s agricultural land market is undergoing a profound transformation, with prices compounding at nearly 29 per cent annually over the past three years, according to the IIMA-SFarmsIndia Agri Land Price Index.

Far from being driven by farm productivity alone, land values are increasingly reflecting connectivity, infrastructure access, and future urban potential.

While regions linked to transport corridors and cities are amassing rapid wealth, large parts of eastern and central India remain undervalued despite abundant land. The trend underscores a widening rural divide and highlights the growing gap between how farmland is priced by markets and governed by policy

India’s agricultural land market is undergoing a structural repricing that goes far beyond farming fundamentals. New evidence from the IIMA-SFarmsIndia Agri Land Price Index (ISALPI) shows that farmland prices have compounded at 18.5 per cent annually since 2019, with even sharper acceleration in recent years: nearly 29 per cent CAGR over the last three years. These are equity-like returns in a market that remains largely unleveraged, opaque, and lightly institutionalised.

What makes the trend striking is not just the pace of appreciation, but where it is happening, and why. The data, drawn from over 9,000 agricultural land listings across 573 districts, suggests that Indian farmland is increasingly priced less like a productive asset and more like a strategic option on infrastructure and urban expansion.

Talking to Bizz Buzz, Dr Prashant Das, Associate Professor (Finance & Accounting/Real Estate), IIMA says, “ISALPI indicates that while the notional wealth of landowning farmers may be rising on paper, this appreciation is rarely converting into steady cash flows. Access to formal finance remains limited, and practical avenues to realise capital gains are constrained.”

This points to the need for a two-pronged policy response: first, land valuation systems must become more dynamic and geographically granular; second, mechanisms such as fractional ownership and farmland tokenisation could help transform rising land prices into liquid, usable wealth, he said.

At one end of the spectrum sits Delhi, where agricultural land prices are estimated at 6.25 times the national base level. Haryana follows at 2.75x, driven by a cluster of districts tightly integrated with the National Capital Region. Gurugram alone records a district-level multiple of 4.75x, the highest in the country, followed by Rewari (4.0x) and Karnal (3.25x).

At the other extreme lie large parts of eastern and central India. West Bengal, Bihar, Odisha, and Assam all record price multiples of just 0.5x, despite often having larger average land parcels than high-price regions. Districts such as Bankura, Purulia, Kheda, Wardha, Madurai, and Bikaner trade at one-fourth of the national benchmark.

The message is clear: land abundance alone does not translate into land value. ISALPI’s hedonic framework controls for acreage, land type, irrigation, and other parcel-level characteristics. What remains is a clear pricing of connectivity and access.

High-price regions consistently exhibit superior connectivity and market access. Agricultural land in these areas is typically located within about 75 minutes of an airport, less than two miles from a highway, and around 20 minutes from an urban local body, while kisan mandis are generally reachable within 25 minutes.

This tight integration with transport, urban centres, and agricultural markets plays a decisive role in sustaining higher land valuations. By contrast, low-price regions suffer from longer railway access times and weaker highway connectivity, even when landholdings are larger.

Average acreage in Odisha (77 acres) and West Bengal (57 acres) exceeds that of several higher-priced states, yet prices remain depressed.

The composition of land listings adds another layer to the story. Nearly 90 per cent of parcels remain classified as agricultural land, but a growing share reflects latent non-agricultural intent. About 4.3 per cent is already categorised as non-cultivated land, often held in states such as Karnataka, Tamil Nadu, Telangana, Maharashtra, and Kerala; regions that also show strong peri-urban price momentum.

Eco-farm, fruit farm, and aquaculture land (still small in aggregate) are disproportionately concentrated in states with better logistics and tourism spillovers. These categories may be marginal today, but they signal how land use expectations are evolving ahead of formal conversion.

Kamesh Mupparaju, CEO, SFarmsIndia, says, “One of the most striking patterns we see is how fragmented India’s farmland market still is. Prices vary sharply even within the same district because transactions are infrequent and information is uneven.”

As more listings, histories, and comparisons come onto digital platforms, we are beginning to see a gradual convergence toward more rational, benchmark-driven pricing, he added.

The timing of the farmland boom coincides with two powerful forces. First, agriculture has been formally recognised as the “first engine of growth” in the Union Budget 2025-26, with public expenditure on the sector rising nearly fivefold over the past decade. Second, investors facing inflation, geopolitical risk, and volatile financial markets are rediscovering land as a real asset hedge. Yet regulation continues to treat farmland primarily as a livelihood asset, not a balance-sheet one.

This disconnect (between how land is priced and how it is governed) is now visible in the data.

ISALPI does more than track prices. It exposes a quiet reordering of India’s rural geography. Regions plugged into infrastructure corridors are accumulating wealth rapidly. Those left out are falling further behind, even when they remain agriculturally productive.

Beyond being just about crops and yields, farmland is about access, optionality, and future land-use expectations. The repricing underway may affect rural inequality, intergenerational wealth, and the politics of land, well before these shifts are acknowledged in policy or public debate.