With prices sky-rocketing due to the ongoing Ukraine-Russia conflict, the Union Cabinet has recently approved a subsidy of more than Rs 60,000 crore for non-urea fertilisers for the first six months of this financial year.


About Fertilisers

A fertiliser is a chemical product either mined or manufactured material containing one or more essential plant nutrients that are immediately or potentially available in sufficiently good amounts.


Macro and Micro Elements in Fertilisers

  • Macro Nutrients: Nitrogen (N), Phosphorus (P), Potash (K), Calcium, Sulphur (S), and Magnesium are known as macro-nutrients (required in comparatively larger amounts).
  • Micro Nutrients: Iron (Fe), Zinc (Zn), Copper, Boron, Manganese Molybdenum, Chloride, and others are the micro-nutrients (required in a smaller quantity) for the growth and development of crop plants.
  • Among the various types, NPK (nitrogen, phosphorus, and potassium) fertilisers are the most common ones, and Urea stands as the most highly consumed fertiliser in India.
  • India is the second-largest consumer of fertilisers globally, with an annual consumption of more than 55.0 million metric ton.


About Fertiliser Subsidy

  • Farmers buy fertilisers at MRPs (maximum retail price) below their normal supply-and-demand-based market rates or what it costs to produce/import them.
  • The MRP of neem-coated urea, for instance, is fixed by the government at Rs 5,922.22 per tonne, whereas its average cost-plus price payable to domestic manufacturers and importers comes to around Rs 17,000 -Rs 23,000 per tonne, respectively.
  • The difference, which varies according to plant-wise production cost and import price, is footed by the Centre as subsidy.
  • The MRPs of non-urea fertilisers are decontrolled or fixed by the companies. However, the Centre pays a flat per-tonne subsidy on these nutrients to ensure reasonable prices.


How is the subsidy paid and who gets it?

  • The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer who pays MRPs less than the market-determined rates.
  • Under the Direct-Benefit Transfer (DBT) system, subsidy payment to the companies would happen only after actual sales to farmers by retailers.
  • Each retailer now has a point-of-sale (PoS) machine linked to the Department of Fertilisers’ e-Urvarak DBT portal.
  • Anybody buying subsidised fertilisers is required to furnish his/her Aadhaar unique identity or Kisan Credit Card number.
  • Only upon the sale getting registered on the e-Urvarak platform can a company claim subsidy.


Government Schemes/Initiatives

1. Nutrient Based Subsidy Scheme, 2010

  • Under the scheme, a fixed rate of subsidy based on the weight (Rs per kg basis) is announced for nutrients namely Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S) by the government on an annual basis.
  • It aims at ensuring the balanced use of fertilisers, improving agricultural productivity, promoting the growth of the indigenous fertilisers industry and also reducing the burden of Subsidy.
  • Urea is not covered under the scheme and due to delay in NBS subsidy payments, Fertiliser companies focus more on Urea than other fertilisers. Hence, the ideal ratio of NPK is disrupted.


2. New Investment Policy 2012 – The Government had notified New Investment Policy – 2012 in January, 2013 with the main objective to facilitate fresh investment, make India self-reliant and reduce import dependency in urea sector.


3. Neem-coated Urea 2015

  • Urea that is coated with neem tree seed oil is called neem-coated urea.
  • The Department of Fertilisers has made it mandatory for all the domestic producers to produce 100% urea as Neem Coated Urea (NCU).
  • Benefits of NCU include –
      • Slow down the process of nitrification of urea
      • Enhance the yield
      • Decrease urea requirement, hence save money


4. New Urea Policy 2015

  • The New Urea Policy was released in May 2015.
  • The Policy seeks to –
      • Increase indigenous urea production,
      • Promote energy efficiency in urea production, and
      • Reduce subsidy burden on the Central government.