Fertilizer Sector reforms – NBS, bio-fertilizers, Neem coating, etc.

Why India needs a fresh Fertilizer Policy?


From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: India's fertilizer subsidy burden


The government is expected to come out with a new fertilizer policy.

What is the news?

  • A task force to examine the production and promotion of bio-fertilizer and organic fertilizers has already been set up under the NITI Aayog.

How much fertilizer does India consume?

  • Total consumption of fertilizers between April and mid-December 2022 was 40.146 million metric tonnes (mmt), with production of 32.076 mmt and imports of 12.839 mmt.
  • The gap between demand and production is met through timely imports.

How is fertilizers availability monitored?

  • Some steps undertaken by the government to improve the availability of fertilizers include:
  1. Assessment of state-wise requirements every month;
  2. 100% neem coating of urea, which increases nutrient efficiency;
  3. Monitoring of crop yield and soil health; and
  4. Online monitoring of the movement of fertilizers through the integrated Fertilizer Monitoring System.

Impact of the current policy

  • Heavy subsidies: This has prompted many farmers to use chemical fertilizers like urea, which leads to higher productivity, but affects soil fertility in the long run.
  • Excessive and inefficient use of fertilizers: This leads to nutrient losses to the environment and could also result in drinking water contamination and impact human lives as a result of unsafe storage practices, as per a UN report.
  • Emission causing: With the subsidy being released directly to companies, technology-inefficient companies are being protected causing carbon emission.

While attempts have been made to reform the fertilizer policy, they had to be rolled back after pressure from various quarters.

Trend in government expenditure

  • Food subsidy: The government has spiked spending on food, fertilizer and fuel subsidy by nearly 70%.
  • Increased expenditure: For 2023-24, the fertilizer ministry might seek budgetary support of ₹2.5 trillion subsidy – outgo for FY23 has already crossed ₹2 trillion.
  • Increased import bill: Russia being a major exporter of liquefied natural gas -critical input for manufacturing of urea – has also led to higher prices.

Steps taken in 2022

  • Implementation of DBT: The department of fertilizers disbursed subsidies for urea and nutrient-based subsidy, and implemented direct benefit transfer.
  • One Nation One Fertilizers Scheme: It also implemented the ONOF scheme which aims to ensure timely supply of fertilizers.
  • Model fertilizer retail outlets: The existing village, block/sub district/taluk and district level fertilizer retail outlets are being converted into model fertilizer retail outlets.

Way forward

  • Promoting local fertilizers: Lower duty on imported phosphoric acid to raise the competitiveness of local fertilizer manufactures, and an incentive for promoting organic fertilizers, could be proposed.
  • Bio-fertilizer and organic fertilizers: A task force on bio-fertilizer and organic fertilizers has already been set up under NITI Aayog.
  • Curbing hefty subsidies: Considering the long-term interests of agriculture and the effects of using inorganic fertilizers, saving a huge amount on account of subsidy support is a step in the right direction.


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