 |
| Reforming India’s fertiliser subsidy can restore soil health, improve farm productivity, and reduce fiscal stress.(Representing ai image) |
Reforming the Fertiliser Subsidy: Political Courage, Economic Wisdom, and High National Rewards
- Dr. Sanjaykumar Pawar
Table of Contents
- Introduction: Why Fertiliser Subsidy Reform Matters Now
- India’s Fertiliser Subsidy: Size, Structure, and Fiscal Stress
- The Political Economy of Agricultural Reform
- Urea: The Core of India’s Fertiliser Distortion
- Nutrient Imbalance and Soil Health Crisis
- India vs China: A Productivity Comparison
- Environmental and Health Costs of Current Subsidies
- Declining Returns: Fertiliser Use and Yield Response
- Leakage, Smuggling, and System Inefficiencies
- The Case for Reform: Why Courage Is Needed
- Policy Option One: Direct Income Support to Farmers
- Policy Option Two: Bringing Urea under NBS
- Role of Technology, Data, and AI in Reform
- Economic, Environmental, and Social Gains from Reform
- Visual Snapshot: Fertiliser Subsidy at a Glance
- Frequently Asked Questions (FAQs)
- Conclusion: Reform as an Investment in India’s Future
- References and Data Sources
1. Introduction: Why Fertiliser Subsidy Reform Matters Now
India is standing at a defining moment in its economic journey. Over the past decade, the government has pushed through major reforms in GST, income tax, labour laws, insurance, and trade agreements to keep the economy on a high-growth path of over 7 per cent GDP, even as global risks and geopolitical tensions rise. However, one critical area has remained largely untouched—agriculture, especially the way India supports farmers through fertiliser subsidies.
Today, fertiliser subsidies are no longer a marginal budget item. They are projected to touch ₹2 lakh crore in FY26, making them the second-largest subsidy after food. This scale raises serious questions about fiscal sustainability, soil health, and long-term farm productivity. Continuing with the current system may seem politically safe, but economically and environmentally, it is becoming increasingly costly.
Reforming the fertiliser subsidy regime requires political courage, but the potential rewards are significant. Smarter subsidy design can improve nutrient balance in soils, raise crop productivity, reduce environmental damage, and strengthen farmer incomes. Importantly, reform does not mean abandoning farmers. It means redesigning support so that public money works harder and delivers better outcomes.
At this crucial crossroads, fertiliser subsidy reform is not just an agricultural issue—it is a national economic priority tied to sustainable growth and food security.
2. India’s Fertiliser Subsidy: Size, Structure, and Fiscal Stress
India’s fertiliser subsidy has quietly grown into one of the biggest pressure points on the Union Budget, even though it rarely gets the same attention as food or fuel subsidies. Today, it stands as the second-largest subsidy item, next only to food support. This alone signals why it deserves urgent public and policy focus.
In FY26, the numbers tell a powerful story:
- Fertiliser subsidy: around ₹2 lakh crore
- Allocation to the Ministry of Agriculture & Farmers’ Welfare: ₹1.37 lakh crore
- Total Union Budget size: nearly ₹51 lakh crore
What is striking is not just the size, but the comparison. India now spends more on fertiliser subsidies than on agriculture development itself. In other words, more money goes into keeping fertiliser prices artificially low than into improving irrigation, research, extension services, or rural infrastructure. This imbalance has long-term economic consequences.
Why Is the Fertiliser Subsidy Exploding?
The rapid rise in the fertiliser subsidy is not accidental. It is the outcome of structural weaknesses and global dependencies that India can no longer ignore.
1. Heavy Import Dependence
India’s fertiliser system is deeply tied to international markets:
- 78% of natural gas used for urea production is imported
- Nearly 90% of phosphatic fertilisers depend on imported raw materials or finished products
- 100% of potash is imported
This means domestic fertiliser prices are effectively linked to global energy and commodity prices.
2. Volatile Global Energy Prices
Fertiliser production, especially urea, is energy-intensive. When global gas prices spike due to geopolitical tensions or supply disruptions, India absorbs the shock through higher subsidies rather than higher retail prices. The fiscal burden rises silently, year after year.
3. Rising Fertiliser Consumption
Low prices encourage higher usage. While this may appear farmer-friendly in the short run, it pushes up subsidy bills without proportionate gains in productivity.
4. Fixed Urea Prices Despite Rising Costs
Urea is sold at a fixed, highly subsidised price, even as production and import costs increase. The government pays the difference, turning urea into a fiscal liability.
The Bigger Economic Risk
In simple terms, India is subsidising global price volatility. Every international shock—whether from energy markets or geopolitics—directly hits the national budget. This makes public finances less predictable, more vulnerable, and harder to manage, especially at a time when resources are needed for growth, infrastructure, and social development.
3. The Political Economy of Agricultural Reform
Agricultural reform in India is never just an economic decision — it is deeply political, emotional, and social. For millions of farmers, policy changes are not abstract ideas; they affect livelihoods, traditions, and security. This is why agriculture reforms remain one of the most sensitive areas of economic policymaking.
Why Agricultural Reforms Face Resistance
The rollback of the farm laws in 2021 left a lasting impact on the political economy of agriculture. It created hesitation among policymakers and reinforced the belief that any reform in agriculture carries high political risk. Farmers fear uncertainty, while governments fear backlash.
Yet, avoiding reform does not mean preserving stability. In reality, policy inaction has its own hidden costs, which are steadily accumulating.
The Economic Cost of Avoiding Reform
When agricultural reforms are postponed, the burden quietly shifts to the economy and society at large:
-
Ballooning subsidies crowd out public investment
Rising spending on fertiliser, food, and power subsidies leaves fewer resources for irrigation, research, rural infrastructure, and agri-technology. Short-term relief replaces long-term growth. -
Soil degradation reduces long-term productivity
Distorted incentives, especially underpriced fertilisers, encourage overuse. Over time, soil fertility declines, yields stagnate, and farmers are forced to use even more inputs to maintain output. -
Environmental damage raises health costs
Excess chemical use contaminates groundwater, increases air pollution, and contributes to climate change. These environmental damages eventually translate into higher public health spending and lower quality of life in rural areas.
In simple terms, what appears politically safe today becomes economically costly tomorrow.
Understanding the Political Economy
Agriculture employs nearly half of India’s workforce, but contributes less than one-fifth to GDP. This imbalance makes farm policies politically powerful but economically complex. Any reform that raises short-term uncertainty, even if it promises long-term gains, faces strong resistance.
This is why reforms that focus only on efficiency — without addressing farmer security and trust — often fail.
The Way Forward: Reform with Farmers at the Centre
True leadership does not lie in avoiding difficult decisions. It lies in designing reforms that protect farmers while correcting economic distortions.
Effective agricultural reform should:
- Replace price distortions with direct income support
- Be gradual, transparent, and consultative
- Use technology to ensure benefits reach genuine farmers
- Communicate clearly that reforms aim to increase incomes, not reduce support
When farmers see reform as an opportunity rather than a threat, political resistance softens.
The political economy of agricultural reform demands empathy, patience, and courage. Delaying reform only postpones the pain and magnifies the cost. India needs policies that balance political realities with economic wisdom — putting farmer welfare at the heart of sustainable reform.
4. Urea: The Core of India’s Fertiliser Distortion
Urea sits at the heart of India’s fertiliser subsidy problem. On the surface, cheap urea appears farmer-friendly, but beneath it lies a policy distortion that is quietly damaging soil health, farm productivity, and the national exchequer.
Today, urea is sold at a fixed price of just ₹242 per 45-kg bag, making it one of the cheapest fertilisers in the world. This price has remained largely unchanged for years, even as global energy prices and production costs have risen sharply. As a result, the government absorbs the difference through subsidies. In fact, nearly two-thirds of India’s total fertiliser subsidy is spent on urea alone.
In contrast, other critical fertilisers such as DAP (di-ammonium phosphate) and MOP (muriate of potash) operate under market-based pricing. Since 2010, these non-urea fertilisers have been covered under the Nutrient-Based Subsidy (NBS) system, where subsidies are linked to nutrient content rather than fixed retail prices. This creates a sharp price gap between urea and other fertilisers—and that gap shapes farmer behaviour.
Why does this matter so much?
The simplest way to understand this distortion is to think of fertilisers as a balanced diet for crops:
- Nitrogen (N) is like carbohydrates — it promotes fast growth and greenery
- Phosphorus (P) is like proteins — essential for roots, flowers, and grains
- Potassium (K) is like vitamins — vital for plant strength and disease resistance
India’s subsidy policy makes “carbohydrates” extremely cheap, while “proteins and vitamins” are relatively expensive. Faced with rising input costs and thin margins, farmers naturally use more urea and cut back on phosphorus and potassium. The outcome is unbalanced nutrition for crops.
In the short run, excessive urea use gives fields a lush green appearance, creating the illusion of healthy crops. But over time, soils become exhausted. Crop yields begin to stagnate, pest attacks increase, and farmers are forced to apply even more fertiliser just to maintain the same output. This vicious cycle raises costs without improving incomes.
From an economic perspective, this distortion also weakens efficiency. Subsidies intended to boost production end up encouraging waste, lowering nutrient-use efficiency, and increasing environmental damage. From a policy standpoint, the exclusion of urea from the NBS framework remains the single biggest flaw in India’s fertiliser pricing system.
Correcting this imbalance does not mean abandoning farmers. It means aligning prices with agronomic reality, so crops receive balanced nutrition, soils recover their health, and public money delivers real, lasting returns.
5. Nutrient Imbalance and Soil Health Crisis
India’s agricultural soils are quietly sending out a distress signal. While crop fields may look greener than ever, the truth beneath the surface is far more worrying. The country’s nutrient imbalance crisis, driven largely by distorted fertiliser use, is steadily eroding soil health and long-term farm productivity.
At the heart of this problem lies India’s N:P:K ratio (Nitrogen: Phosphorus: Potassium).
- Current ratio: 10.9 : 4.4 : 1
- Recommended ratio: 4 : 2 : 1
This gap is not just a technical issue—it reflects a systemic policy failure that rewards excess nitrogen use, mainly through heavily subsidised urea.
Why Nutrient Balance Matters
Think of soil nutrition like a balanced diet for humans. Consuming only carbohydrates may give quick energy, but without proteins and vitamins, the body weakens over time. Crops behave the same way.
Nitrogen helps plants grow fast and look lush. Phosphorus supports root development and grain formation. Potassium strengthens plants against pests, diseases, and weather stress. When one nutrient dominates, the entire system becomes fragile.
Key Consequences of Nutrient Imbalance
-
Excess Nitrogen, Weak Foundations
Heavy nitrogen use makes crops look healthy, but roots remain shallow and weak. This increases lodging, reduces nutrient absorption, and lowers yield quality. -
Potassium Deficiency and Pest Attacks
Low potassium weakens plant immunity. Crops become more vulnerable to insects, diseases, and drought, forcing farmers to spend more on pesticides. -
Poor Phosphorus, Poor Grains
Inadequate phosphorus affects flowering and grain development. The result is lower yields, lighter grains, and reduced market value. -
Declining Soil Organic Matter
Continuous urea use without balanced nutrients depletes soil organic carbon, reducing water retention and microbial activity.
Urea Addiction: A Silent Soil Killer
Indian soils are becoming “addicted to urea.” Like a short-term stimulant, urea gives quick visible results but weakens soil structure over time. Farmers then need even more fertiliser to achieve the same yield—a classic case of diminishing returns.
This explains why fertiliser use has increased sharply, while yield gains have slowed.
If this imbalance continues, India risks:
- Falling crop productivity
- Rising input costs for farmers
- Degraded soils that take decades to recover
Correcting nutrient imbalance is not optional—it is essential for sustainable agriculture, food security, and farmer incomes. Balanced fertilisation is not just good agronomy; it is sound economic policy.
6. India vs China: A Productivity Comparison
| Indicator | India | China |
|---|---|---|
| Cropland (mha) | 168.3 | 127.6 |
| Fertiliser use (kg/ha) | 182 | 373 |
| N:P:K ratio | 10.9:4.4:1 | 2.6:1.1:1 |
| Agri-GVA (2023) | $0.63 trillion | $1.27 trillion |
A comparison between India and China’s agricultural productivity reveals a striking reality: land size alone does not determine farm output. Despite having less cropland, China generates nearly double the agricultural value of India. The difference lies in policy design, input efficiency, and farmer incentives.
India cultivates about 168.3 million hectares, significantly more than China’s 127.6 million hectares. Yet in 2023, India’s agricultural gross value added stood at $0.63 trillion, while China recorded $1.27 trillion. This productivity gap cannot be explained by land availability—it is driven by how inputs, especially fertilisers, are used.
China applies nearly 373 kg of fertiliser per hectare, compared to India’s 182 kg/ha, but more importantly, it maintains a balanced N:P:K ratio of 2.6:1.1:1. India’s distorted ratio of 10.9:4.4:1 reflects excessive nitrogen use, which boosts short-term growth but limits long-term yields.
The reasons are clear. China follows market-based fertiliser pricing, allowing prices to guide efficient nutrient use. Farmers receive direct income support per unit of land, rather than hidden subsidies through cheap inputs. As a result, over 60% of fertiliser consumption in China comes from complex and customised blends, encouraging innovation and balanced nutrition.
India’s heavy urea subsidy, in contrast, discourages innovation and efficiency. Closing this productivity gap requires smarter pricing, not more fertiliser.
7. Environmental and Health Costs of Current Subsidies
India’s fertiliser subsidy was created with a noble goal: to ensure food security and support farmers. For decades, it helped raise crop production and prevent hunger. However, over time, the way this subsidy is designed—especially the heavy focus on cheap urea—has created serious environmental and public health costs. What was once a solution is increasingly becoming part of the problem.
1. Low Fertiliser Efficiency: More Waste Than Gain
One of the biggest hidden issues is low fertiliser use efficiency. Studies show that only 35–40 per cent of applied fertiliser nutrients are actually absorbed by crops. The rest is lost to air, water, or soil.
Think of it like pouring water into a leaking bucket. Farmers apply more fertiliser hoping for higher yields, but much of it simply disappears—raising costs without improving productivity. This inefficiency pushes farmers into a cycle of higher input use and lower returns.
2. Air Pollution and Climate Change Risks
Excessive nitrogen use does not stay in the soil. A large portion escapes into the atmosphere as nitrous oxide (N₂O), a greenhouse gas that is about 278 times more powerful than carbon dioxide in trapping heat.
This means that fertiliser misuse is quietly adding to climate change, even though it rarely appears in public discussions on emissions. Ironically, agriculture—one of the sectors most vulnerable to climate change—is also contributing to it because of distorted subsidy policies.
3. Groundwater Contamination and Health Hazards
Another serious consequence is nitrate pollution of groundwater. When excess nitrogen leaches into the soil, it eventually reaches wells, ponds, and drinking water sources.
High nitrate levels in water are linked to:
- Blue baby syndrome in infants
- Digestive and thyroid disorders
- Increased long-term health risks
In many rural areas, people depend directly on groundwater. What begins as a farm-level decision ends up becoming a community-wide health issue.
4. Declining Soil Health and Long-Term Productivity
Overuse of nitrogen-rich fertilisers weakens soil structure and reduces soil organic carbon. Crops may look greener, but the soil slowly loses its natural fertility. Farmers then need even more fertiliser to maintain yields, increasing dependence on subsidies.
This is a classic case of short-term gains leading to long-term damage.
5. A Subsidy Working Against Its Own Purpose
The greatest irony is that a subsidy designed to promote food security is now:
- Damaging soil health
- Polluting water and air
- Increasing health costs
- Reducing fertiliser efficiency
Smarter fertiliser use, balanced nutrients, and policy reform can protect both people and the planet. Supporting farmers should not come at the cost of public health and environmental sustainability.
True food security lies in healthy soils, clean water, and efficient farming—not in excessive subsidies alone.
8. Declining Returns: Fertiliser Use and Yield Response
For decades, fertilisers played a key role in boosting India’s farm production. But today, the returns from fertiliser use are steadily declining, raising serious concerns for farmers, policymakers, and the environment.
What Do the Numbers Tell Us?
The fertiliser-to-grain response ratio clearly shows the problem:
- 1970s: 1 unit of fertiliser produced 10 units of grain
- 2015 (irrigated areas): 1 unit of fertiliser produced only 2.7 units of grain
In simple words, farmers now need almost four times more fertiliser to get the same output they once achieved. This sharp fall signals inefficiency, not progress.
Why Are Returns Falling?
Several factors explain this trend:
- Imbalanced nutrient use, especially excessive urea
- Declining soil organic matter, reducing natural fertility
- Micronutrient deficiencies ignored by current subsidy policies
- Overdependence on chemical inputs, with less focus on soil health
It’s like adding more fuel to a car with a broken engine—expenses go up, but performance keeps falling.
Impact on Farmers and the Economy
- Rising input costs reduce net farm incomes
- Productivity gains stagnate despite higher subsidies
- Public money delivers diminishing returns
Improving soil health, promoting balanced fertilisation, and correcting price distortions can restore efficiency. Sustainable productivity depends on smarter input use, not higher quantities.
True agricultural growth comes from healthy soils and informed policy, not from pouring more fertiliser into an exhausted system.
9. Leakage, Smuggling, and System Inefficiencies
India’s fertiliser subsidy, meant to support farmers, is facing a major efficiency challenge. A significant portion of subsidised urea never reaches the fields where it is needed. Estimates suggest that 20–25% of urea is diverted, creating huge economic and social costs.
Key Issues
- Diversion to Non-Agricultural Uses: Subsidised urea is often used in industries like plywood, textiles, and paper manufacturing, where cheaper nitrogen inputs cut costs but defeat the subsidy’s purpose.
- Smuggling Across Borders: Large quantities are illegally exported to neighbouring countries, resulting in lost revenue for India.
- Economic Waste: This leakage translates to thousands of crores lost annually, straining the government budget and limiting funds for essential agricultural programs.
- Policy Inefficiency: The current subsidy system, with price controls and limited monitoring, fails to ensure targeted delivery to genuine farmers.
To curb these inefficiencies:
- Strengthen digital tracking of fertiliser distribution
- Expand Direct Benefit Transfer (DBT) systems for farmers
- Use AI and satellite data to monitor farm-level usage
By reducing leakage, India can ensure that every rupee of subsidy directly benefits farmers, boosts productivity, and safeguards national resources.
10. The Case for Reform: Why Courage Is Needed
Reforming India’s fertiliser subsidy is no small task. It’s a subject that touches the very core of agriculture, rural livelihoods, and national economics. While the need for reform is urgent, many policymakers hesitate. Why? Because change comes with perceived risks—but the rewards, both economic and environmental, are far greater.
Challenges Facing Fertiliser Reform
-
Perceived Political Risk
Fertiliser pricing is deeply intertwined with voter sentiment. Any move to deregulate prices or reduce subsidies can be seen as politically sensitive. Policymakers fear that short-term backlash may outweigh long-term gains, especially in states heavily reliant on agriculture. -
Fear of Farmer Backlash
Farmers are understandably cautious about reforms affecting their input costs. Past experiences, like the controversial farm laws, show how sudden changes without proper safeguards can trigger widespread protests. This makes gradual and carefully planned reform essential.
The Benefits of Courageous Reform
Despite these challenges, the benefits of reform are compelling:
- Lower Fiscal Burden: Fertiliser subsidies consume nearly ₹2 lakh crore annually, more than the agriculture ministry’s budget. Rationalising subsidies can free resources for infrastructure, irrigation, and research.
- Higher Productivity: Price distortions currently push farmers to overuse urea while neglecting phosphorus and potassium. Correcting this imbalance encourages balanced nutrient use, improving yields and crop quality.
- Environmental Sustainability: Excessive nitrogen application harms soil, contaminates water, and releases greenhouse gases. Reform can promote sustainable fertiliser use, protecting ecosystems for future generations.
- Improved Farm Incomes: Farmers benefit from healthier soils, higher yields, and access to direct income support programs that compensate for subsidy rationalisation, creating financial stability without distorting markets.
The Key Question: How, Not Whether
India’s fertiliser subsidy reform is inevitable. The real question is how to implement it effectively. Gradual deregulation, targeted direct transfers, and intelligent use of data can mitigate risks while unlocking long-term rewards. Political courage today means investing in India’s agricultural future, balancing fiscal prudence with farmer welfare.
Reform is not an attack on farmers—it’s a pathway to prosperous, sustainable, and resilient agriculture. The sooner the process begins, the sooner India can reap the economic and environmental benefits of a modernised fertiliser subsidy system.
11. Policy Option One: Direct Income Support to Farmers
One of the most effective ways to reform India’s fertiliser subsidy system is through direct income support for farmers. Instead of controlling urea and other fertiliser prices, the government can gradually dismantle price controls and transfer the same amount of subsidy directly into farmers’ accounts. This approach ensures farmers continue to receive financial support while giving them freedom to make their own choices.
How It Works
- Gradual Removal of Price Controls: Urea and other fertilisers would move toward market-determined prices, reflecting actual production and import costs.
- Direct Income Transfers: Farmers receive cash or digital transfers equivalent to the subsidy they would have received under the old system. This ensures income protection without distorting market signals.
Key Advantages
- Market-Driven Fertiliser Prices: Farmers pay realistic prices, encouraging more efficient use of fertilisers. Overuse of urea is discouraged, and soil nutrient balance can improve.
- Encourages Balanced Nutrient Use: By removing price distortions, farmers are more likely to use phosphorus, potassium, and micronutrients, improving soil health and crop yields.
- Stimulates Innovation: Fertiliser companies are motivated to develop better nutrient blends and customised fertilisers, knowing the market will determine demand.
- Empowers Farmers: With direct income support, farmers can decide how to spend the subsidy, invest in better fertilisers, or explore alternative soil enhancement methods.
Overcoming Challenges
A significant challenge is identifying tenant farmers, who often do not appear in formal land records. The solution lies in data integration:
- Combine land ownership records, PM-KISAN beneficiary lists, fertiliser sales data, crop sowing patterns, and satellite imagery.
- Use AI and machine learning tools to verify farm size, crop type, and eligibility.
This ensures the support reaches actual cultivators, preventing leakage and fraud.
Why This Option Matters
Direct income support is more than a financial reform—it is a strategic move to make agriculture sustainable. By linking subsidies to farmers rather than fertiliser prices, India can:
- Reduce fiscal pressure on the Union Budget
- Promote sustainable soil management
- Increase crop productivity
- Strengthen farmer autonomy
Direct income support transforms the subsidy from a cost-heavy system into an empowering tool that benefits farmers, the environment, and the economy.
12. Policy Option Two: Bringing Urea under NBS
Reforming India’s fertiliser subsidy is politically sensitive. While the ideal solution is to gradually deregulate urea prices and provide direct income support to farmers, there’s a pragmatic, second-best approach: bringing urea under the Nutrient-Based Subsidy (NBS) regime. This option is not only politically feasible but also economically smart.
Key Features of the Reform
-
Include Urea in NBS
Currently, urea is sold at a fixed price, heavily subsidised, which distorts farmers’ choices. By bringing urea under NBS, its subsidy would be linked to actual nutrient content rather than a fixed retail price. This ensures that farmers get fertilisers based on crop needs rather than price incentives. -
Reduce Nitrogen Subsidy Gradually
Nitrogen (urea) is overused in many states, leading to imbalanced nutrient application, soil degradation, and environmental harm. Gradually reducing nitrogen subsidies encourages farmers to apply it more judiciously, helping restore soil health without sudden financial shock. -
Increase Support for Phosphorus and Potassium
The current system under-subsidises phosphorus (P) and potassium (K), critical nutrients for crop quality and productivity. By reallocating support, the government can nudge farmers toward balanced fertiliser use, improving yields and long-term soil fertility. -
Maintain Overall Subsidy Budget
A critical political consideration is avoiding an increase in the overall subsidy bill. This reform keeps the total expenditure similar while correcting price distortions, making it easier for policymakers to implement without backlash.
Benefits of Bringing Urea under NBS
- Balanced Nutrient Application: Farmers start using fertilisers according to crop needs, reducing overuse of urea and increasing phosphorus and potassium use.
- Improved Soil Health: Better nutrient ratios help restore soil organic content and fertility.
- Enhanced Productivity: Balanced fertilisation boosts crop yields and grain quality.
- Fiscal Efficiency: Corrects subsidy leakages and avoids unnecessary overspending.
- Environmentally Friendly: Lower nitrogen overuse reduces groundwater contamination and greenhouse gas emissions.
In essence, bringing urea under the NBS regime is a practical, politically viable solution. It avoids abrupt shocks, incentivises balanced fertiliser use, and aligns short-term farmer interests with long-term sustainability and productivity. For India, this approach could be a game-changer, balancing fiscal prudence, agricultural efficiency, and environmental protection—all at once.
13. Role of Technology, Data, and AI in Reform
Reforming India’s fertiliser subsidy is not just a policy challenge—it’s a data and technology challenge. With millions of farmers and vast agricultural land, ensuring that subsidies reach the right people at the right time requires more than manual oversight. Fortunately, modern technology, data, and artificial intelligence (AI) are making targeted reforms possible, improving efficiency and fairness.
1. PM-KISAN Database: Direct Support to Farmers
The PM-KISAN scheme provides direct income support to farmers. By linking fertiliser subsidies to this database, the government can ensure that financial support reaches genuine landholders. This minimizes leakages and reduces the chances of subsidies being diverted to non-agricultural uses.
2. Digitized Land Records: Accurate Identification
One of the biggest hurdles in subsidy reform is identifying tenant farmers or smallholders who may not have formal documentation. Digitized land records allow authorities to map farm plots precisely, ensuring that every farmer receives subsidy support based on actual land use rather than outdated or incomplete records.
3. Fertiliser Sales Data: Tracking Usage
Collecting and analyzing fertiliser sales data helps policymakers monitor consumption patterns and detect anomalies. For instance, if a region reports unusually high urea sales, AI algorithms can flag potential leakage or misuse. This real-time monitoring ensures that subsidies are spent efficiently.
4. Satellite Crop Imagery: Monitoring Crops at Scale
Satellite imagery can track crop health, sowing patterns, and even nutrient deficiencies across millions of hectares. By combining this data with subsidy distribution, authorities can target regions that need specific fertiliser blends, improving soil health and crop productivity.
5. AI-Based Farmer Identification: Precision Targeting
AI can integrate multiple data sources—land records, PM-KISAN data, fertiliser purchases, and satellite imagery—to accurately identify beneficiaries, including tenant farmers and marginal cultivators. This ensures that subsidies are precisely targeted, reducing wastage and maximizing impact.
Why Technology Matters
By using technology, data, and AI, India can transform its fertiliser subsidy regime from a broad, inefficient system into a precise, effective tool that improves productivity, protects soil health, and reduces fiscal stress. Modern tools don’t just make reform feasible—they make it smart, sustainable, and future-ready.
14. Economic, Environmental, and Social Gains from Reform
Reforming India’s fertiliser subsidy is not just a policy tweak—it’s a transformative move that can deliver triple benefits: economic, environmental, and social. By redesigning the subsidy system, India can ensure sustainable growth while protecting farmers and natural resources. Here’s how:
Economic Gains
- Higher Productivity: Balanced fertiliser use encourages healthier crops, stronger yields, and better returns for farmers. When nutrients are applied correctly, soils become more fertile over time, reducing dependence on additional chemical inputs.
- Lower Fiscal Stress: Fertiliser subsidies currently consume nearly ₹2 lakh crore annually. Rationalising these subsidies—either through direct income support or nutrient-based pricing—can reduce the strain on government budgets, freeing funds for other critical areas like irrigation, research, and rural infrastructure.
- More Private Investment: A transparent and market-driven fertiliser system encourages innovation from private companies, leading to the development of customised fertilisers, efficient distribution networks, and advanced agricultural technologies.
Environmental Gains
- Reduced Emissions: Overuse of nitrogen-based fertilisers releases nitrous oxide, a potent greenhouse gas. Optimising fertiliser use can significantly lower these emissions, contributing to climate mitigation efforts.
- Improved Soil Health: Balanced application of nitrogen, phosphorus, and potassium restores soil fertility, promotes organic matter retention, and reduces nutrient depletion. Healthy soils produce resilient crops and reduce the need for chemical interventions.
- Cleaner Groundwater: Excess fertilisers often seep into water bodies, contaminating drinking water with nitrates. Controlled and precise fertiliser use protects water quality, ensuring safer resources for rural communities.
Social Gains
- Sustainable Farmer Incomes: By targeting subsidies effectively and encouraging efficient fertiliser use, farmers can save on input costs while maintaining or improving yields. This boosts financial stability and reduces dependence on government handouts.
- Better Food Quality: Balanced nutrient application improves the nutritional value and quality of crops, benefiting consumers nationwide.
- Long-Term Food Security: By improving soil fertility and crop productivity sustainably, India can secure food production for future generations, ensuring resilience against climate shocks and population growth.
In short, reforming the fertiliser subsidy is not just about money—it’s about building a healthier environment, a stronger economy, and a more secure future for farmers and citizens alike. When implemented carefully, these reforms can create a win-win scenario where India’s agriculture becomes more productive, sustainable, and profitable.
15. Visual Snapshot: Fertiliser Subsidy at a Glance
- Pie chart: Share of urea in subsidy
- Bar graph: India vs China fertiliser use
- Line graph: Fertiliser response ratio decline
Fertiliser Subsidy at a Glance: India Agriculture
16. Frequently Asked Questions (FAQs)
Q1. Will fertiliser reform hurt small farmers?
No. Direct income support protects farmers while improving efficiency.
Q2. Why not keep urea cheap?
Cheap urea encourages overuse, soil damage, and inefficiency.
Q3. Is reform politically risky?
Yes, but gradual reform with compensation reduces risk.
Q4. Can technology really identify beneficiaries?
Yes. India already runs large-scale DBT systems successfully.
17. Conclusion: Reform as an Investment in India’s Future
Reforming the fertiliser subsidy is not a cost-cutting exercise. It is an investment in productivity, sustainability, and resilience. Political courage today can unlock high economic rewards tomorrow.
India’s agricultural future depends not on how much subsidy we give, but how wisely we give it.
18. References and Data Sources
- Union Budget Documents (FY26)
- World Bank Agricultural GVA Data
- Ministry of Chemicals & Fertilisers
- FAO Fertiliser Statistics
- Indian Council of Agricultural Research (ICAR)
No comments:
Post a Comment