Prior to the
implementation of Nutrient Based Subsidy (NBS) Policy, the MRP of P&K
fertilizers were fixed by the Government, which was much lower than its
delivered cost and difference in delivered cost and its MRP was paid as
subsidy. This led to increase in consumption of fertilizers but also
near stagnation in agricultural productivity. The fertilizer sector
worked in a highly regulated environment and the fertilizer industry
suffered from low profitability as compared to other sectors. The
industry lacked innovation and had no incentive to invest towards
modernization and increase efficiency. The subsidy outgo of Government
has also increased exponentially.
It was, thus, observed that subsidy regime prior to NBS Policy had been
proving to be a losing proposition for all the stake holders viz
farmers, industry and the Government. Considering all the issues
relating to agriculture productivity, balanced fertilization and growth
of indigenous fertilizer industry, competiveness amongst the fertilizer
companies and to overcome the deficiency of concession scheme, the
Government decided to introduce Nutrient Based Subsidy (NBS) Policy for
P&K fertilizers w.e.f. 1.4.2010.
Since, NBS Policy has been under implementation for last two and a half
years only, a formal study is yet to be conducted on its impact.
However, there is a proposal under consideration to get the study done
by a reputed consulting firm.
Urea is made available to the farmers at a price fixed by the
Government, which is much below the delivered price. The difference in
the cost of delivered price and MRP is provided as subsidy. Government
also provides a fixed subsidy on 21 grades of P&K fertilizers, depending
on their nutrient content, to make them available to the farmers at
subsidised rates. The MRPs of P&K fertilizers are, however, fixed by the
No anomalies regarding prices of fertilizers have come to the notice of
This information was given by the Minister of State for Chemicals and
Fertilisers, Shri Srikant Kumar Jena in a written reply in the Rajya