General Studies Paper 3 (Indian Economy)
Question:- What are the various issues associated with fertilizer subsidy in India? Suggest measures to resolve them. Answer in 250 words.
Jun 28, 2022


The subsidy allows an individual to buy a product or use a service at a lower price than its market cost. The farmers have been getting the benefits of fertilizer subsidies since the era of the Green revolution. It has become a core component of providing input support to the agricultural sector. The government is making available fertilizers, namely urea and 24 grades of P&K fertilizers to farmers at subsidized prices through manufacturers/importers. However, there are long impending issues associated with the fertilizer subsidy regime in India.



  1. High fiscal burden: The fertilizer industry is highly import dependent. The Central Government spends about Rs. 80,000 crore on subsidies for chemical fertilizers every year.
  2. Low productivity: The productivity of fertilizer use is remarkably low in India because of imbalance of nutrient application, lack of investment to improve farm-level nutrient management, and the collapse of agricultural extension.
  3. Imbalanced use of fertilizer due to subsidy regime
  4. No denial policy: Currently anybody can purchase any quantity of fertilizers through the PoS machines. There is a limit of 100 bags per transaction, but no limit is placed on the number of transactions. This enhances the diversion of fertilizers towards unintended beneficiaries. For instance, urea’s super subsidized and multiple usage nature makes it highly prone to diversion. It can be used as a binder by plywood/particle board makers, cheap protein source by animal feed manufacturers or adulterant by milk vendors. Further, it is also smuggled to Nepal and Bangladesh.
  5. Ecological impact– When manure or commercial fertilizers enter surface water, the nutrients they release stimulate microorganism growth. The growth and reproduction of microorganisms reduce the dissolved oxygen content of the water body. Without sufficient dissolved oxygen in surface water, fish and other aquatic species suffocate. Moreover, applying excessive amounts of fertilizer leads to the release of harmful greenhouse gases into the atmosphere and the eutrophication of our waterways.
  6. Health impacts– Over use of fertilizers pollutes groundwater. High levels of nitrate may cause some diseases like hemoglobin disorders, Alzheimer’s disease and diabetes mellitus. Infants may develop the blue baby syndrome (It refers to a number of conditions that affect oxygen transportation in the blood, resulting in the blueness of the skin in babies.)



  1. Greener alternatives: The focus should be on organic farming, organic fertilizers like vermin-compost and sea-weed extracts, neem coated urea etc. Agro-ecological approaches, including conservation, low-input, and minimum tillage agriculture, are all recognized as “nature-positive” and regenerative practices. These would prevent land degradation and make farming sustainable.
  2. Rationalization of subsidy: the government should consider alternative ways for helping the farmers like the use of Direct Benefit transfer instead of subsidies. This would curb its diversion for non-agricultural use and reduce the number of fraudulent beneficiaries. Until then, there should be a cap on the total number of subsidised fertilizer bags that any person can buy during an entire kharif or rabi cropping season. For an optimal fertilizer subsidy transfer, the first order of business would be to create a list of beneficiary farmers, including tenant farmers (who farm land owned by others, paying rent with cash or with a portion of the produce). This won’t be easy, but existing databases like the PM Kisan list (which includes the registered farmers under the Indian government’s PM Kisan cash transfer scheme) can be a starting point. The next step would be to determine how much subsidy each beneficiary is entitled to, depending on the farmers’ land holdings, geo-climatic conditions, crop types, soil health status, etc.
  3. In the long run, the government needs to augment the agricultural income of farmers so that they voluntarily give up their subsidies in the future. This would happen with better implementation of schemes like E-NAM, SAMPADA, PM Fasal Bima Yojana, etc.
  4. Awareness: Educating and nudging the tillers of land. Schemes like Soil Health Card are beneficial to encourage judicious use of fertilizers.


CONCLUSION: The subsidies are like a dole to the farmer, it is saving his body but destroying its spirit. The ultimate solution is to make agriculture more lucrative and remunerative which would gradually lead to the withdrawal of subsidies and relieve the government of their fiscal burden. We need to promote the usage of modern technology in agriculture, efficient farming techniques to serve our ever growing population on one hand to be in balance with nature on the other.