Government Approves ₹62,370 Crore Fertiliser Subsidy for Rabi Season 2026–27

Introduction

To ensure that farmers can purchase essential fertilisers at affordable prices, the Government of India provides financial assistance through fertiliser subsidies. In an important decision, the Union Cabinet approved a fertiliser subsidy of ₹62,370.02 crore for the Rabi 2026–27 season. This allocation is significantly higher than the previous year’s allocation of ₹37,952 crore.

The decision aims to ensure the availability of Phosphatic and Potassic (P&K) fertilisers at affordable prices during the Rabi cropping season. The increased allocation also highlights the challenges faced by India due to rising international fertiliser prices, geopolitical tensions, higher energy costs and dependence on imports.

Why in News?

The Union Cabinet has approved a subsidy of ₹62,370.02 crore for Phosphatic and Potassic (P&K) fertilisers for the Rabi 2026–27 season.The allocation is approximately 64% higher than the previous year’s allocation of ₹37,952 crore.

The subsidy aims to:

• Ensure the availability of fertilisers at affordable prices.
• Support farmers during the Rabi cropping season.
• Reduce the impact of international fertiliser price fluctuations.
• Maintain agricultural productivity.
• Ensure the timely availability of essential plant nutrients.

The subsidy will cover important fertilisers such as Di-Ammonium Phosphate (DAP) and different NPK and NPKS grades.

Why is this important?

• India depends significantly on international markets for several fertilisers and their raw materials. Therefore, any increase in global prices or disruption in supply chains can increase the cost of agricultural inputs.
• Government subsidies help protect farmers from sudden increases in fertiliser prices.

What is Fertiliser Subsidy?

• A fertiliser subsidy is financial assistance provided by the government to make fertilisers available to farmers at affordable prices.
• Fertilisers are essential agricultural inputs because they provide nutrients required for plant growth and crop development.
• However, producing and importing fertilisers can be expensive. Without government support, farmers may have to pay much higher prices.
• The government therefore bears a portion of the cost so that farmers can purchase fertilisers at comparatively lower prices.

How Does Fertiliser Subsidy Work?

The government provides financial support to fertiliser companies so that fertilisers can be sold to farmers at subsidised prices.

The general process involves:

1. Fertiliser companies manufacture or import fertilisers.
2. The government announces applicable subsidy rates or policies.
3. Fertilisers are supplied to authorised dealers and retailers.
4. Farmers purchase fertilisers through authorised retail outlets.
5. Sales are recorded through the Point of Sale (PoS) system.
6. Eligible subsidy payments are released to fertiliser companies based on verified sales.

Important: Under the Direct Benefit Transfer (DBT) system for fertilisers, subsidy is generally released to fertiliser companies after verified retail sales to farmers. It is not ordinarily transferred directly into farmers’ bank accounts.

Difference Between Urea Subsidy and P&K Fertiliser Subsidy

India follows different subsidy mechanisms for urea and Phosphatic and Potassic fertilisers.

This distinction is important for understanding India’s fertiliser policy.

What are Fertilisers?

• Fertilisers are substances that supply essential nutrients to plants and improve their growth and development.
• They help maintain soil nutrient availability and support agricultural productivity.
• Unlike traditional organic manure, many chemical fertilisers contain concentrated nutrients that can be applied in relatively smaller quantities.

Major Nutrients Required by Plants

Plants require several nutrients for healthy growth. These are broadly classified into primary, secondary and micronutrients.

A. Primary Nutrients

The three major nutrients required by plants are:

• Nitrogen (N): Supports vegetative growth and the development of leaves and stems.
• Phosphorus (P): Helps in root development, flowering, seed formation and energy transfer.
• Potassium (K): Improves water regulation, disease resistance and overall plant health.

B. Secondary Nutrients

These include:

• Calcium.
• Magnesium.
• Sulphur.

C. Micronutrients

Plants require these nutrients in smaller quantities:

• Zinc.
• Iron.
• Boron.
• Copper.
• Manganese.
• Molybdenum.

Although micronutrients are required in small quantities, they are essential for healthy crop development.

Common Types of Fertilisers

What is the Nutrient-Based Subsidy (NBS) Scheme?

• The Nutrient-Based Subsidy Scheme was introduced in 2010 by the Department of Fertilisers under the Ministry of Chemicals and Fertilisers.
• It aims to ensure the availability of Phosphatic and Potassic fertilisers to farmers at affordable prices while encouraging the balanced use of nutrients.
• Earlier, the fertiliser subsidy system was heavily focused on individual fertiliser products. The NBS mechanism shifted the focus towards the nutrient content of fertilisers.

Objectives of the NBS Scheme

The major objectives include:

1. Ensuring the availability of P&K fertilisers at affordable prices.
2. Promoting balanced fertiliser consumption.
3. Reducing excessive dependence on nitrogen-based fertilisers.
4. Improving soil health.
5. Encouraging efficient use of agricultural nutrients.
6. Supporting agricultural productivity.

How Does the NBS Scheme Work?

Under this scheme, the government provides a fixed subsidy per kilogram of nutrient contained in notified fertilisers.

The subsidy is calculated on the basis of four major nutrients:

• Nitrogen (N)
• Phosphorus (P)
• Potassium (K)
• Sulphur (S)

The subsidy rates are periodically revised, generally for the Kharif and Rabi seasons, taking into account international fertiliser prices and input costs. Fertiliser companies are allowed to determine the retail prices of P&K fertilisers, subject to government monitoring and applicable conditions.

Coverage of the NBS Scheme

The scheme covers notified grades of P&K fertilisers, including:

• Di-Ammonium Phosphate (DAP).
• Muriate of Potash (MOP).
• Nitrogen, Phosphorus and Potassium (NPK) fertilisers.
• Nitrogen, Phosphorus, Potassium and Sulphur (NPKS) fertilisers.

The notified grades are eligible for subsidy according to the applicable government provisions.

Why Has the Government Increased the Fertiliser Subsidy?

• The increased allocation of ₹62,370.02 crore reflects the growing financial pressure on the fertiliser sector.
• Several domestic and international factors have contributed to the increase.

1. Rising International Fertiliser Prices

• India imports several fertilisers and important raw materials from international markets.
• An increase in the global prices of DAP, MOP, urea-related inputs and sulphur can increase the cost of fertiliser procurement.
• When international prices rise, the government may need to provide additional financial support to maintain affordable prices for farmers.

2. Geopolitical Tensions and Supply Chain Disruptions

• International conflicts and geopolitical tensions can affect fertiliser production, transportation and trade.
• The Russia–Ukraine conflict and instability in West Asia have created uncertainty in global energy and commodity markets.

Such disruptions can:

• Increase transportation costs.
• Affect the availability of raw materials.
• Increase international fertiliser prices.
• Create uncertainty in import arrangements.

As a result, India may face higher fertiliser procurement costs.

3. Increasing Energy Costs

• Energy is an important input in fertiliser manufacturing, particularly in the production of urea.
• Natural gas is a major feedstock for urea production.
• When natural gas and LNG prices increase, the cost of domestic fertiliser production also rises.
• The government may therefore need to provide additional subsidies to maintain affordable fertiliser prices.

4. India’s Dependence on Fertiliser Imports

India has made significant progress in domestic fertiliser production. However, it continues to depend on imports for several important fertilisers and raw materials.

These include:

• Phosphate rock.
• Rock phosphate-based inputs.
• Potash.
• Sulphur.
• Phosphoric acid.
• Ammonia and other industrial inputs.

This dependence exposes India to fluctuations in international prices and global supply disruptions.

5. Ensuring Food Security

• Agriculture remains an important source of livelihood for millions of Indian households.
• Affordable fertilisers are necessary to maintain agricultural production and ensure food availability.
• An increase in subsidy support helps farmers manage input costs and supports the country’s broader food security objectives.

What are the Major Challenges Associated with Fertiliser Subsidies?

Although fertiliser subsidies provide important economic support to farmers, the existing system also faces several challenges.

A. Imbalanced Use of Fertilisers

• One of the biggest problems in Indian agriculture is the excessive use of nitrogen-based fertilisers, particularly urea.
• Farmers may prefer urea because of its relatively low retail price.
• However, excessive nitrogen application and inadequate use of phosphorus, potassium and micronutrients can disturb the natural nutrient balance of soil.
• Impact:

• Declining soil fertility.
• Nutrient imbalance.
• Reduced efficiency of fertiliser application.
• Long-term agricultural sustainability concerns.

B. Soil Degradation

• Continuous and excessive application of chemical fertilisers without proper nutrient management can contribute to soil degradation.
• It may disturb soil nutrient balance and affect soil biological properties.
• In some areas, inappropriate fertiliser use, combined with unsuitable irrigation practices, can also contribute to soil salinity and other soil health problems.
• Therefore, fertiliser application should be based on crop requirements and soil conditions.

C. Increasing Fiscal Burden

• Fertiliser subsidies represent a significant expenditure for the government.
• When international prices increase, the government may need to increase subsidy allocations to protect farmers from higher input costs.
• This creates pressure on public finances and can affect budgetary planning.

D. Diversion and Misuse of Fertilisers

• Subsidised fertilisers are intended for agricultural use.
• However, differences between subsidised and market prices may create incentives for diversion to non-agricultural uses.
• Such diversion can reduce the effectiveness of government expenditure.
• The DBT system and PoS-based sales monitoring help improve transparency and reduce such irregularities.

E. Import Dependence

• Dependence on imported fertilisers and raw materials exposes India to international market volatility.
• Supply disruptions, trade restrictions and geopolitical tensions can affect the availability and affordability of fertilisers.
• Strengthening domestic production and diversifying import sources are therefore important.

Government Initiatives to Improve the Fertiliser Sector in India

The Government of India has introduced several initiatives to improve fertiliser availability, promote balanced nutrient application and reduce excessive dependence on chemical fertilisers.

1. One Nation One Fertiliser Scheme

The One Nation One Fertiliser scheme was introduced to bring uniformity in fertiliser branding across the country.

Under this initiative, subsidised fertilisers are marketed under the common brand name Bharat.

Its major objectives include:

• Uniform branding of fertilisers.
• Improving transparency.
• Reducing confusion among farmers.
• Strengthening monitoring of fertiliser distribution.

2. PM-PRANAM Scheme

PM-PRANAM stands for PM Programme for Restoration, Awareness Generation, Nourishment and Amelioration of Mother Earth.

The scheme aims to encourage states and Union Territories to reduce the consumption of chemical fertilisers and promote alternative fertilisers.

Major objectives:

• Encouraging balanced fertiliser use.
• Promoting organic and biofertilisers.
• Reducing excessive chemical fertiliser consumption.
• Improving soil health.
• Supporting sustainable agricultural practices.

The scheme provides incentives to states and Union Territories for reducing chemical fertiliser consumption compared with the prescribed baseline.

3. Sulphur-Coated Urea (Urea Gold)

Urea Gold is a sulphur-coated urea fertiliser introduced to address sulphur deficiency in agricultural soils.

It combines nitrogen and sulphur, two important nutrients required for crop development.

Benefits include:

• Addressing sulphur deficiency.
• Improving nutrient availability.
• Supporting balanced fertiliser application.
• Potentially improving nutrient-use efficiency.

4. Nano Urea

Nano Urea is a liquid fertiliser developed by IFFCO.

It is designed to provide nitrogen to plants through a formulation containing nano-sized nitrogen particles.

Major benefits include:

• Easy transportation and storage.
• Lower bulk requirements compared with conventional urea.
• Potential improvement in nitrogen-use efficiency.
• Reduced dependence on conventional fertiliser application when used appropriately.

However, Nano Urea should be used according to recommended agricultural practices and should not be treated as a universal replacement for conventional fertiliser requirements.

5. Direct Benefit Transfer (DBT) in Fertilisers

• The government introduced the DBT system to improve transparency in fertiliser distribution.
• Under this mechanism, fertiliser sales are recorded through PoS devices installed at authorised retail outlets.
• The subsidy is released to fertiliser companies after the sale of fertilisers to farmers is verified.

Importance:

• Improves transparency.
• Reduces diversion of subsidised fertilisers.
• Strengthens monitoring.
• Improves accountability in subsidy distribution.

6. Soil Health Card Scheme

• The Soil Health Card Scheme helps farmers understand the nutrient status of their agricultural land.
• It provides information about soil health and recommends suitable nutrient management practices.
• The scheme encourages farmers to apply fertilisers according to soil requirements rather than using them indiscriminately.
• This can improve fertiliser efficiency, reduce unnecessary input costs and support sustainable agriculture.

How Can India Make Fertiliser Use More Sustainable?

India needs to move beyond simply increasing fertiliser availability. The focus should also be on improving fertiliser efficiency and maintaining long-term soil health.

Some important measures include:

A. Promote Balanced Nutrient Management

• Farmers should be encouraged to apply nitrogen, phosphorus and potassium in appropriate proportions.
• Fertiliser recommendations should be based on soil testing, crop requirements and local agricultural conditions.

B. Strengthen Soil Testing Facilities

• More accessible soil testing facilities can help farmers understand the nutrient requirements of their land.
• The Soil Health Card Scheme should be strengthened through timely testing, local-language recommendations and farmer awareness programmes.

C. Encourage Biofertilisers and Organic Manure

India should promote alternative nutrient sources to reduce excessive dependence on chemical fertilisers.

These include:

• Biofertilisers.
• Compost.
• Vermicompost.
• Green manure.
• Farmyard manure.
• Organic nutrient sources.

Such practices can complement chemical fertilisers and contribute to sustainable soil management.

D. Improve Domestic Fertiliser Production

• India should strengthen domestic manufacturing capacity and diversify its import sources.
• Investment in research, technology and efficient manufacturing can reduce vulnerability to international market fluctuations.

E. Promote Precision Agriculture

• Modern agricultural technologies can help farmers apply fertilisers in the required quantities and at the appropriate time.
• Precision agriculture, fertigation and improved nutrient management techniques can reduce wastage and improve agricultural productivity.

F. Increase Farmer Awareness

Farmers should receive practical training on:

• Appropriate fertiliser dosage.
• Soil testing.
• Integrated Nutrient Management (INM).
• Organic and biofertilisers.
• Nutrient-use efficiency.
• Sustainable agricultural practices.

Agricultural extension services and Krishi Vigyan Kendras can play an important role in this process.

Importance of Fertiliser Subsidy for Indian Agriculture

• Fertiliser subsidies are an important part of India’s agricultural support system.
• Their importance goes beyond reducing the cost of agricultural inputs.

1. Supports Small and Marginal Farmers: Affordable fertilisers help reduce cultivation costs, particularly for farmers with limited financial resources.

2. Promotes Agricultural Productivity: Timely access to essential nutrients supports crop growth and agricultural production.

3. Strengthens Food Security: Fertiliser availability contributes to stable agricultural output and national food security.

4. Protects Farmers from Global Price Fluctuations: Subsidies reduce the immediate impact of international price increases on domestic farmers.

5. Supports Rural Livelihoods: Affordable agricultural inputs help protect farm incomes and rural employment.

6. Promotes Agricultural Stability: Predictable fertiliser availability helps farmers plan their agricultural operations during important cropping seasons.

Conclusion: Moving Towards Affordable and Sustainable Fertiliser Use

The approval of ₹62,370.02 crore in fertiliser subsidies for the Rabi 2026–27 season reflects the government’s commitment to maintaining affordable fertiliser availability for farmers.

However, increasing subsidy expenditure alone cannot address all the structural challenges facing India’s fertiliser sector. The country must focus on reducing import dependence, improving domestic production, encouraging balanced nutrient application and protecting long-term soil health.

Initiatives such as the Nutrient-Based Subsidy Scheme, PM-PRANAM, Soil Health Card Scheme and One Nation One Fertiliser can contribute to a more efficient fertiliser ecosystem. The long-term objective should be to move from excessive dependence on chemical fertilisers towards balanced, efficient and sustainable nutrient management.

A strong fertiliser policy must protect farmers’ interests while ensuring fiscal sustainability, environmental protection and long-term agricultural productivity.

Frequently Asked Questions (FAQs)

Q1. How much fertiliser subsidy has the government approved for Rabi 2026–27?

The Union Cabinet has approved ₹62,370.02 crore for P&K fertilisers for the Rabi 2026–27 season.

Q2. What is the Nutrient-Based Subsidy Scheme?

The NBS Scheme was introduced in 2010 to provide subsidies on notified P&K fertilisers based on their nutrient content. Its objective is to ensure affordable fertiliser availability and promote balanced nutrient application.

Q3. Is urea covered under the NBS Scheme?

No. Urea is not covered under the Nutrient-Based Subsidy Scheme. It follows a separate subsidy and price-control mechanism.

Q4. What are the four nutrients covered under NBS?

The four nutrients are Nitrogen (N), Phosphorus (P), Potassium (K) and Sulphur (S).

Q5. What is the PM-PRANAM Scheme?

PM-PRANAM is a government initiative that encourages states and Union Territories to reduce excessive chemical fertiliser consumption and promote alternative fertilisers.

Q6. What is One Nation One Fertiliser?

It is an initiative that brings uniformity in fertiliser branding by marketing subsidised fertilisers under the common Bharat brand.

Q7. What is the role of DBT in fertiliser distribution?

DBT uses PoS-based verified sales to release subsidies to fertiliser companies. It improves transparency and helps prevent the diversion of subsidised fertilisers.

Q8. Why is India dependent on fertiliser imports?

India imports several essential fertilisers and raw materials, including potash and phosphate-related inputs. Limited domestic availability of certain resources makes imports important for meeting agricultural requirements.

Q9. Why is balanced fertiliser application important?

Balanced fertiliser application ensures that crops receive nutrients in appropriate proportions. It improves nutrient-use efficiency, supports soil health and helps maintain long-term agricultural productivity.