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Fertilizer Subsidy in India 

GS-3 Mains : Economy 

Revision Notes 

Examine the impact of over-consumption of urea and import dependence on the fertilizer subsidy scheme in India.

Fertilizer Subsidy Scheme

  • Urea Subsidy Scheme
    • Statutory notified maximum retail price (MRP) for 45 kg bag of urea: ₹242
    • Actual cost per bag: ₹3,000
    • Government subsidizes the difference between delivered cost and market realization by urea manufacturer/importer.
  • Nutrient-based Subsidy (NBS) Policy
    • Subsidy provided on per kg basis for Nitrogen (N), Phosphate (P), Potash (K), and Sulfur (S).
    • Covers 25 grades of P&K fertilizers and 18 grades of NPKS complex fertilizers.
    • MRP of P&K fertilizers determined by manufacturers/marketers.


  • Over-consumption of Urea:
    • High N use compared to ideal ratio of 4:2:1 (N:P:K).
    • Negative consequences for soil health.
  • Import Dependence: Reliance on imports for key fertilizers like urea exposes India to price fluctuations.
  • Leakage and Diversion: Subsidized fertilizers diverted to black market.
  • Fiscal Burden: High cost of fertilizer subsidy strains government finances.
  • Inequity: Benefits often accrue more to large farmers, exacerbating income inequality.

Government Measures

  • PM PRANAM Scheme: Promotes alternate fertilizers and balanced use of chemical fertilizers.
  • Neem-coated Urea: Increases nutrient efficiency, crop yield, and reduces diversion.
  • Sulfur Coated Urea (Urea Gold): Addresses sulfur deficiency and reduces input costs.
  • Nano Urea: Liquid fertilizer alternative to conventional urea.

Way Ahead

  • Promote Balanced Nutrient Management:
    • Awareness campaigns
    • Training programs
    • Extension services
    • Information on soil health, crop needs, and overuse impacts
  • Encourage Alternative Fertilizers:
    • Biofertilizers
    • Green manure
    • Compost
  • Reduce Import Dependence
  • Improve Targeting of Subsidies

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