Agricultural input support, subsidy burden and sustainability

Ahead of the Rabi 2025–26 season, the Union Cabinet has approved a fertiliser subsidy package worth ₹37,952 crore to ensure the availability of urea, DAP, and NPK fertilisers at affordable prices for farmers.
This decision is part of the Nutrient-Based Subsidy (NBS) Scheme under the Department of Fertilisers, Ministry of Chemicals & Fertilisers.

The government continues to absorb high global fertiliser and gas prices to prevent cost escalation for farmers, maintaining its commitment to input price stability — a politically and economically sensitive issue.

Key Details

• The package covers phosphatic and potassic (P&K) fertilisers under the NBS scheme.
• Total subsidy for FY 2025–26 is projected at around ₹1.9 lakh crore, including both urea and non-urea fertilisers.
• Rationale: High international prices of natural gas (key urea input) and imported DAP warranted enhanced budgetary allocation to prevent MRP increases for farmers.
• Farmers will continue to get urea at ₹266 per bag (45 kg) and DAP at ₹1,350 per bag — unchanged from last season.

Why This Matters

1. Farmer Cost Relief: Subsidy keeps input costs low, especially important for Rabi crops like wheat, mustard, and barley.
2. Food Security Link: Affordable fertilisers ensure adequate production, stabilising food prices and supporting buffer stocks.
3. Fiscal Impact: The fertiliser subsidy remains the second-largest subsidy head after food, accounting for over 10% of total central expenditure.
4. Environmental and Soil Concerns: Blanket subsidies incentivise overuse of urea, leading to soil degradation, nitrogen imbalance, and water pollution.

Current Challenges

1. Rising Subsidy Burden: Fertiliser subsidies have grown from ₹70,000 crore in 2017–18 to nearly ₹2 lakh crore in 2025–26, driven by volatile import prices.
2. Nutrient Imbalance: Farmers prefer urea (heavily subsidised) over balanced NPK fertilisation, leading to declining soil fertility and micronutrient depletion.
3. Leakages & Inefficiency: Subsidies often benefit fertiliser companies or large farmers more than smallholders.
4. Import Dependence: India imports nearly 40% of its DAP and 25% of its urea feedstock, exposing domestic prices to global shocks.
5. Environmental Stress: Over-fertilisation contributes to groundwater contamination, GHG emissions (N₂O), and ecosystem damage.

Government Measures & Reforms

• Direct Benefit Transfer (DBT) in Fertilisers: Introduced in 2018 to track sales via point-of-sale (PoS) devices at retail outlets.
• One Nation, One Fertiliser Scheme (2022): Standardises branding under “Bharat” label to ensure uniform quality and availability.
• Promotion of Nano Urea: IFFCO’s nano-urea rollout aims to cut urea consumption by 50% and reduce import dependence.
• Nutrient-Based Subsidy (NBS): Encourages balanced fertilisation by providing per-kg subsidy for N, P, K, and S nutrients.
• Soil Health Card Scheme: Enables farmers to apply fertilisers based on soil-specific nutrient needs.