Syllabus
GS Paper 3 – Issues related to Direct and Indirect Farm Subsidies,Cropping Patterns in various parts of the country
Source
The Hindu,25/10/2023
Context
The Union Cabinet approved a ₹22,303 crore subsidy on P&K fertilizers for the current Rabi season.
Content
Nutrient-Based Subsidy (NBS)
- Nutrient-Based Subsidy or NBS is a government initiative that aims to provide farmers with fertilizers(non-urea-based) at subsidized prices.
- The NBS scheme was launched in 2010 and is implemented by the Department of Fertilizers,Ministry of Chemicals and Fertilizers.
- NBS is based on the nutrient content (N, P, K & S) of fertilizers, rather than their weight .
- The subsidy rates for nitrogen, phosphorus, potash, and sulfur are fixed by the government for each crop season(Rabi,Kharif)
- This scheme ensures smooth availability of these fertilizers to farmers at affordable prices.
Significance/Need of NBS
- Ensures the availability of essential nutrients to farmers at subsidized prices.
- Rationalizes the subsidy on P&K fertilizers in view of recent trends in the international prices of fertilizers and inputs.
- Allows phosphoric and potassium fertilizer manufacturers, marketers, and importers to determine fair MRPs based on domestic and international P&K fertilizer costs, the country’s inventory levels, and currency exchange rate.
- Promote the consumption of Phosphatic and Potassic (P&K) fertilizers to achieve an optimal balance of Nitrogen, Phosphorus, and Potassium (N:P:K= 4:2:1) in NPK fertilization.
- Improves soil health by optimal usage of nutrients.
- Helps in doubling the income of farmers by increasing agricultural productivity and reducing input costs.
- Contributes to food security by ensuring adequate supply of fertilizers for meeting the growing demand for food grains in the country.
Issues/challenges related to nutrient-based subsidy (NBS) scheme
- Urea is not included in the NBS scheme and this creates a price distortion and encourages the excessive use of urea, which worsens the plant nutrient imbalance and causes environmental problems such as groundwater pollution, soil acidification and greenhouse gas emissions.
- The international prices of fertilizers and their raw materials are high and volatile, which poses a challenge for ensuring timely and adequate availability of fertilizers at affordable prices to the farmers.
- There is a regional disparity in the availability and consumption of fertilizers across different states in India. The states with higher agricultural productivity and irrigation facilities tend to use more fertilizers than the states with lower productivity and rainfed agriculture. This creates an imbalance in the nutrient status of the soils and affects the equity and sustainability of agricultural development.
- The fertilizer subsidy is a huge fiscal burden on the government, which affects its ability to invest in other priority areas such as research and development, extension services, irrigation infrastructure, etc.
- Subsidy delivery system is inefficient and prone to leakages, delays and diversion of subsidized fertilizers for non-agricultural purposes.
- Lack of awareness among farmers about the benefits of balanced fertilization and the nutrient content of different fertilizers.
Implications of exclusion of Urea from NBS
- Currently,The Maximum Retail Price (MRP) of urea is statutorily fixed by the Government of India and it is not under NBS scheme.
- The Indian government has kept the price of urea low to ensure that it remains affordable for farmers, who are the primary consumers of this fertilizer.
- This has led to the increase in prices of non-urea fertilizers (eg: Diammonium Phosphate (DAP)) due to the freedom granted to manufacturers of non-urea fertilizers to set Maximum Retail Prices (MRPs) within reasonable limits, along with fixed per-tonne subsidies based on nutrient content.
- This has contributed to the increase in prices of non urea fertilizers, while the MRP of urea has remained unchanged or increasing only at a slow pace.
- This has resulted in farmers using more urea (because of its low price) than other fertilizers,thus leading to soil health degradation and imbalance in fertilizer utilization.
- Subsidized urea is also getting diverted to non-agricultural uses and is also being smuggled to neighbouring countries.
Way Forward
- Implementation of Commission for Agricultural Costs and Prices (CACP) recommendation to bring urea under the nutrient-based subsidy (NBS) regime to address the problem of imbalanced use of nutrients.
- Additionally, A cap on the number of subsidized bags of fertilizers per farmer (like LPG) would reduce the government’s subsidy burden, releasing resources to invest in agriculture research and development and infrastructure (CACP recommendation)
Related Topics
Kharif,Rabi and Zaid Crops
| Kharif Crops Sown in the rainy season, (June to September) Need a lot of water and hot weather for their growth. Harvested at the end of the monsoon season, around September or October. Examples: Rice, maize, millet, soybean etc. | Rabi Crops Sown in the winter season, (October to March) Need a warm climate for germination and maturation of seeds, but a cold environment for their growth. Harvested in the spring season, around April or May. Examples: wheat, gram, barley, peas, oats etc. | Zaid Crops Grown between the kharif and rabi seasons, (March to June). Need warm and dry weather as a vital growth period and longer day length for flowering. Also called gap-filler crops. Examples: cucumber, watermelon etc. |
Reference
- Cabinet approves revision in nutrient-based subsidy rates for fertilizers
- Cabinet approves Nutrient Based Subsidy (NBS) rates for RABI Season
- CACP recommends Centre to bring urea under NBS regime to check overuse
Practice Question
Discuss the objectives, features, and challenges of the NBS scheme in promoting balanced fertilization and agricultural productivity in India.