The central government has approved a subsidy of ₹24,475.53 crore for Phosphatic and Potassic (P&K) fertilizers under the Nutrient Based Subsidy (NBS) scheme.
More About the news
- According to an official statement, the Union Cabinet has given the green light to the Ministry of Chemicals and Fertilizers’ proposal to set NBS rates.
- It has been announced for the upcoming rabi season, covering the period from October 1, 2024, to March 31, 2025.
- The decision aims to ensure that fertilizers remain accessible to farmers at subsidized, affordable, and reasonable prices.
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About N, P & K
- Nitrogen (N) :Largely responsible for the growth of leaves on the plant.
- Phosphorus (P) : Largely responsible for root growth and flower and fruit development.
- Potassium (K) :Helps the overall functions of the plant perform correctly.
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Nutrient Based Subsidy Scheme
- Initiated in 2010, it aims to increase the consumption of P&K fertilizers and achieve an optimum NPK balance (4:2:1).
- Implemented by: Department of Fertilizers, Ministry of Chemicals & Fertilizers
- Subsidy based on nutrient content: Fertilizers are provided to farmers at subsidized rates based on the nutrients (N, P, K, and S) they contain.
- Annual/bi-annual subsidy determination: The subsidy rates are decided on an annual or bi-annual basis.
- Additional subsidy for secondary and micronutrients: Fertilizers fortified with secondary and micronutrients like zinc receive additional subsidies.
- MRP fixation: The Maximum Retail Price (MRP) is fixed by fertilizer companies considering market dynamics. The government monitors these prices to ensure reasonableness.
- Scope: Covers all phosphatic and potassic (P&K) fertilizers, excluding urea.
Issues Regarding NBS
- Price distortions: The NBS policy has led to price distortions that have caused an imbalance in the use of nutrients.
- For example, urea’s price has remained unchanged, while the MRPs of other fertilizers have increased.
- Overuse of Urea: Price distortion has led to farmers overusing urea, which has worsened soil health.
- Financial sustainability: The rising amounts of fertilizer subsidy in the budget are a concern in terms of financial sustainability.
- Leakages: The subsidy has been criticized for leakages and for fertilizers being sold at higher prices during peak demand periods
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Key Recommendations for Improving the Nutrient Based Subsidy (NBS) Policy
- Robust Mechanism for MRP Determination: Implement a transparent and data-driven mechanism to set MRPs.
- Targeted subsidies: Provide subsidies to specific crops or regions with high fertilizer requirements.
- Performance-based incentives: Reward farmers for efficient fertilizer use and adoption of sustainable practices.
- Strengthened Monitoring and Regulation: Enhance surveillance of MRP adherence and import regulations.
- Secure Fertilizer Supplies: Develop long-term supply agreements with domestic and international producers. Invest in domestic fertilizer production capacity.Explore joint ventures and partnerships to secure foreign fertilizer assets.
- Promoting Fertilizer Awareness: Utilize Krishi Vigyan Kendras (KVKs) to educate farmers about proper fertilizer use and best practices.
September 20, 2024
