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2 Feb 2026·Source: The Indian Express
3 min
EconomyEnvironment & EcologyNEWS

Fertilizer Subsidy Surges: Unrestrained Consumption, Weak Rupee Impact

Unrestrained fertilizer use and a weak rupee drive up subsidy costs significantly.

Fertilizer Subsidy Surges: Unrestrained Consumption, Weak Rupee Impact

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The fertilizer subsidy bill is increasing due to unrestrained consumption and a weak rupee. This poses a challenge to the government's fiscal management. Subsidies on fertilizers are intended to support farmers, but excessive use can lead to environmental problems and imbalanced soil nutrition. A weak rupee makes imports more expensive, further increasing the subsidy burden. The government needs to balance supporting farmers with promoting sustainable agricultural practices.

UPSC Exam Angles

1.

GS Paper 3 (Economy): Government Budgeting, Subsidies

2.

Connects to agricultural economics, food security, and environmental sustainability

3.

Potential question types: Statement-based, analytical

Visual Insights

More Information

Background

The fertilizer subsidy in India has a long history, aimed at supporting farmers and ensuring food security. Initially, subsidies were introduced to encourage the adoption of high-yielding varieties and boost agricultural production during the Green Revolution. This intervention was crucial in transforming India from a food-deficit nation to a self-sufficient one. Over time, the fertilizer subsidy regime has evolved, facing various challenges and reforms. The government has experimented with different approaches, including direct benefit transfer (DBT) and nutrient-based subsidy (NBS) schemes. The DBT scheme aims to directly transfer the subsidy amount to farmers' accounts, while the NBS policy provides a fixed subsidy on nutrients like nitrogen, phosphorus, and potassium, encouraging balanced fertilizer use. The legal and constitutional framework for fertilizer subsidies is embedded in the government's commitment to agricultural development and food security. While there isn't a specific constitutional article mandating fertilizer subsidies, the Directive Principles of State Policy, particularly Article 39(b), which emphasizes equitable distribution of resources, provides a broad framework. Various government policies and schemes are implemented under this overarching principle.

Latest Developments

In recent years, the government has been grappling with the increasing burden of fertilizer subsidies. Factors such as rising international prices of fertilizers and raw materials, coupled with a depreciating rupee, have contributed to the surge in subsidy expenditure. The government has been exploring various options to rationalize subsidies and promote efficient fertilizer use. There are ongoing debates among stakeholders regarding the optimal level and method of fertilizer subsidies. Farmers' organizations advocate for continued support to ensure affordable access to fertilizers, while economists and environmentalists raise concerns about the environmental impact of excessive fertilizer use and the fiscal burden on the government. Institutions like NITI Aayog have been involved in suggesting reforms to the fertilizer subsidy regime. The future outlook for fertilizer subsidies in India remains uncertain. The government aims to strike a balance between supporting farmers' livelihoods and promoting sustainable agricultural practices. This may involve a combination of measures, including promoting balanced fertilizer use, encouraging organic farming, and improving the efficiency of subsidy delivery through DBT. The government's targets include reducing the subsidy burden while ensuring food security and environmental sustainability.

Frequently Asked Questions

1. What is the main reason for the increasing fertilizer subsidy bill in India?

The fertilizer subsidy bill is increasing due to two main reasons: unrestrained fertilizer consumption and a weak rupee, which makes imports more expensive.

2. How does a weak rupee impact the fertilizer subsidy?

A weak rupee makes the import of fertilizers and raw materials more expensive, leading to a higher subsidy burden for the government.

3. What are the potential environmental consequences of unrestrained fertilizer consumption?

Excessive fertilizer use can lead to environmental problems and imbalanced soil nutrition, harming the long-term health of the soil and potentially polluting water sources.

4. What was the original purpose of introducing fertilizer subsidies in India?

Fertilizer subsidies were initially introduced to encourage the adoption of high-yielding varieties and boost agricultural production during the Green Revolution, transforming India from a food-deficit nation to a self-sufficient one.

5. What options is the government exploring to rationalize fertilizer subsidies?

The government has been exploring various options to rationalize subsidies and promote efficient fertilizer use, but the specific measures are not detailed in the provided information.

6. Why is the fertilizer subsidy issue frequently in the news?

The fertilizer subsidy issue is frequently in the news due to the increasing financial burden on the government and concerns about the environmental impact of excessive fertilizer use.

7. As an administrator, what steps would you suggest to balance supporting farmers and promoting sustainable agriculture regarding fertilizer use?

To balance supporting farmers and promoting sustainable agriculture, I would suggest promoting soil testing-based fertilizer application, encouraging the use of organic fertilizers, and raising awareness among farmers about the long-term consequences of excessive fertilizer use.

8. What are the pros and cons of the current fertilizer subsidy policy?

Pros include supporting farmers and ensuring food security. Cons include the increasing financial burden on the government, environmental problems due to excessive use, and imbalanced soil nutrition.

9. What is the historical background of fertilizer subsidy in India?

The fertilizer subsidy in India has a long history, aimed at supporting farmers and ensuring food security. Initially, subsidies were introduced to encourage the adoption of high-yielding varieties and boost agricultural production during the Green Revolution.

10. What is 'Green Revolution' and how is it related to fertilizer subsidy?

The Green Revolution refers to a period when high-yielding varieties of crops were introduced to increase agricultural production. Fertilizer subsidies were a key component of this strategy, encouraging farmers to adopt these new varieties by making fertilizers more affordable.

Practice Questions (MCQs)

1. Consider the following statements regarding fertilizer subsidies in India: 1. The primary objective of fertilizer subsidies is to ensure food security by making fertilizers affordable for farmers. 2. A weak rupee can decrease the fertilizer subsidy bill due to cheaper imports. 3. Excessive fertilizer use, encouraged by subsidies, can lead to environmental problems. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.1 and 3 only
  • C.2 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is CORRECT: Fertilizer subsidies aim to make fertilizers affordable for farmers, which in turn supports food security. Statement 2 is INCORRECT: A weak rupee makes imports MORE expensive, thus INCREASING the fertilizer subsidy bill. Statement 3 is CORRECT: Excessive fertilizer use can lead to environmental problems such as water pollution and soil degradation. The news summary explicitly mentions this.

2. Which of the following factors contributes to the increasing fertilizer subsidy bill in India, as highlighted in the news summary? 1. Unrestrained fertilizer consumption 2. Strengthening of the Indian Rupee against the US Dollar 3. Increased domestic production of fertilizers Select the correct answer using the code given below:

  • A.1 only
  • B.2 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

The news summary explicitly mentions that unrestrained consumption and a weak rupee contribute to the increasing fertilizer subsidy bill. Increased domestic production would reduce the need for imports and thus decrease the subsidy bill. Therefore, only statement 1 is correct.

3. The Nutrient Based Subsidy (NBS) scheme aims to promote:

  • A.Increased use of urea only
  • B.Balanced use of fertilizers
  • C.Exclusive use of organic fertilizers
  • D.Reduced fertilizer consumption overall
Show Answer

Answer: B

The Nutrient Based Subsidy (NBS) scheme aims to promote balanced use of fertilizers by providing a fixed subsidy on nutrients like nitrogen, phosphorus, and potassium. This encourages farmers to use a mix of fertilizers based on soil requirements, rather than relying heavily on urea.

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