Archive · 30 Sep 2025
India's Fertilizer Subsidies: Challenges and Reforms
Imagine the government gives money to farmers to buy fertilizer to help them grow food, which was useful in the past.
However, the program is costing a lot and is not working well.
Farmers use too much of certain fertilizers, damaging soil and polluting water.
The article suggests changing how the government gives this money.
Instead of giving money to fertilizer companies, the government should give the money directly to the farmers to help them use the fertilizers more wisely, protect the environment, and make the agricultural system more efficient.
Fertilizer subsidies played a key role in agricultural growth, but the structure has led to unintended consequences.
Fertilizer subsidies increased significantly, with a record high in 2022-23.
The subsidy structure favors N-fertilizers, causing an imbalance in soil nutrients.
Imbalanced fertilizer use has led to soil degradation, groundwater contamination, and pollution.
Directly transferring subsidies to farmers is proposed to promote efficient fertilizer use.
- Who
- India
- What
- The rationalization of fertilizer subsidies.
- When
- From 1977 to 2025, with a focus on current issues and future reforms.
- Where
- India
- Why
- To promote efficient fertilizer use, reduce fiscal costs, and address environmental issues.
The case for continued subsidies with current structure
The case for reforms in subsidy distribution
Government expenditure
The case for continued subsidies with current structure
High costs of the current subsidy outweigh the benefits.
The case for reforms in subsidy distribution
Directly transferring subsidies could improve efficiency and address current inefficiencies.
Efficiency and competition
The case for continued subsidies with current structure
Industry controls, reduced competition, and potential leakages.
The case for reforms in subsidy distribution
Reforms are needed to remove industry controls and bring efficiency, innovation, and reduce import dependency.
- Subsidy Increase (1980-2024)
- 382%
- 2022-23 Fertilizer Subsidy
- ₹2.5 lakh crore
- Recommended NPK ratio
- 4:2:1
- Actual NPK ratio (2023-24)
- 10.9:4.4:1
- Fertilizer consumption in 1960s
- 2 kg/ha
- Fertilizer consumption in 2023-24
- 139 kg/ha