Central Idea

The Union Cabinet has announced revisions to the per-kilogram subsidy rates for nitrogen, phosphorus, potassium, and sulphur fertilizers under the nutrient-based regime, distinguishing between the October-March and April-September periods.

Subsidy Rate Changes

Nitrogen (N): The subsidy per kilogram for nitrogen has decreased by 38% between the first half of FY-24 and the October-March period.
Phosphorus (P): Phosphorus subsidy has been reduced by 49%.
Potassium (K): Subsidy for potassium has seen an 84% reduction.
Sulphur (S): Sulphur subsidy has been lowered by 32.5% during the same period.

Fertilizer subsidies have been an integral part of India’s agricultural landscape since the Green Revolution of the 1970s-80s.
This overview delves into the concept of fertilizer subsidies, their disbursement, and associated challenges.

Origins: Fertilizer subsidies emerged during the Green Revolution to boost agricultural productivity.
Subsidized Pricing: Fertilizer subsidy entails farmers purchasing fertilizers at prices below the Maximum Retail Price (MRP), often lower than market rates.
Determining Subsidy Rates: Subsidy rates are influenced by the average price of imported fertilizer over the preceding six months.

Beneficiary: While fertilizer companies receive the subsidy, it ultimately benefits farmers who procure fertilizers at rates lower than market prices.
Direct Benefit Transfer (DBT): Since March 2018, the government introduced a DBT system, where subsidy payments to companies occur post-actual sales to farmers via retailers.
Retailer’s Role: Each of India’s 2.3 lakh retailers is equipped with a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.
Neem-Coated Urea Illustration: Neem-coated urea serves as an example. The government fixes its MRP at Rs. 5,922.22 per tonne, while domestic production costs about Rs. 17,000 per tonne. The variance is covered by the central government through subsidy disbursement.

Decontrolled Pricing: Non-urea fertilizers have pricing determined by companies rather than government intervention.
Two Categories: These non-urea fertilizers are categorized into DAP (Diammonium Phosphate) and MOP (Muriate of Phosphate).
Flat Subsidy: The government provides a uniform per-tonne subsidy to maintain soil nutrition levels and ensure the affordability of other fertilizers.

Low Nitrogen Use Efficiency (NUE): Indian soil exhibits low NUE, primarily found in Urea, leading to excessive use and groundwater pollution.
Groundwater Contamination: Excessive fertilizer application contributes to groundwater contamination.
Overuse: Urea applied to the soil results in losses as NH3 (Ammonia) and Nitrogen Oxides, surpassing WHO-prescribed limits, particularly in Punjab, Haryana, and Rajasthan.
Health Impacts: Nitrate-contaminated water poses health risks, including “blue baby syndrome” in humans.

Fertilizer subsidies are a crucial aspect of Indian agriculture, aiding farmers by reducing the cost of essential inputs.
However, challenges such as overuse, groundwater pollution, and health concerns warrant a comprehensive approach to ensure sustainable and responsible fertilizer usage in the country.