Context
In Fiscal Year 2023-24 (FY24), the fertilizer subsidy has exceeded Revised Estimates (RE) by over ₹6,500 crore.
Key Highlights
- Under the urea subsidy scheme, urea is provided to farmers at a statutorily notified maximum retail price (MRP).
- The MRP of 45 kg bag of urea is ₹242 per bag (distinct of costs closer to neem coating and taxes as applicable) whilst the real price is around ₹3,000 for 45 kg bag.
- The distinction between the delivered cost of urea at farm gate and net market consciousness by the urea units is given as a subsidy to the urea producer/ importer by the government.
Nutrient based subsidy policy
- Under the NBS policy, a fixed rate of subsidy (in ₹ per kg basis) is introduced on vitamins particularly nitrogen (N), phosphate (P), potash (K) and sulfur (S) by the government on an annual/bi-annual basis.
- The per kg subsidy price on the nutrient N, P, K, S is converted into per tonne subsidy on the diverse P&K fertilizers covered under NBS policy.
- At present 25 grades of P&K fertilizers particularly DAP, MAP, TSP, MOP, ammonium sulfate, SSP, PDM and 18 grades of NPKS complex fertilizers are protected under the NBS Policy.
- Under the NBS regime, MRP of P&K fertilizers has been left open and fertilizer manufacturers/marketers are allowed to repair the MRP at reasonable rates.
Challenges associated with Fertilizer Subsidy
- Over-consumption: The intake of nitrogen in India is a whole lot higher than many other nations in the world.
- Indian farmers do not adhere to the set up perfect fertilizer ratio of 4:2:1 of N:P:K, with poor results for soil fitness.
- India is closely dependent on imports for key fertilizers like urea, which exposes the country to fee fluctuations in the global marketplace.
- Leakage: There were times of leakages and diversion of subsidized fertilizers to the black market.
- Fiscal burden: India’s fertilizer subsidy is one of the most important in the world, and it regularly overshoots the budgeted amount, leading to financial pressure.
- The subsidy benefits regularly accrue greater to big and rich farmers in preference to small and marginalized farmers, exacerbating earnings inequality in rural regions.
Government measures to address the hassle
- PM PRANAM scheme: PM Programme for Restoration, Awareness Generation, Nourishment and Amelioration of Mother – Earth (PMPRANAM)” was launched to incentivize States/ Union Territories to promote trade fertilizers and balanced use of chemical fertilizers.
- Neem-lined urea: The government has delivered 100% Neem Coating on all backed agricultural grade urea in the country with the intention to boost nutrient efficiency, crop yield, soil health and check the diversion of agricultural grade urea for non-agricultural activities.
- Sulfur Coated Urea (Urea Gold) was brought to overcome the sulfur deficiency in the soil and decrease the enter value of the farmers.
- Nano Urea: It is a liquid fertilizer advanced by IFFCO. It is an alternative to conventional urea.
Way Ahead
- There is a need to inspire farmers to adopt balanced nutrient management practices through awareness campaigns, training programs, and extension services.
- Providing statistics on soil health, crop nutrient necessities, and the adverse outcomes of overuse can help farmers make informed decisions about fertilizer application.
- Encouragement of the manufacturing and use of opportunity and eco-friendly fertilizers which include biofertilizers, green manure, compost and so on can reduce dependency on imports and make contributions to sustainable agricultural practices.
Source: The Hindu
UPSC Mains Practice Question
Q.How do subsidies affect the cropping pattern, crop diversity and the economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (2017)
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