The Union Cabinet recently sanctioned the Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilisers for the upcoming Rabi season of 2022-23, effective from 1st October, 2022 to 31st March, 2023. All non-Urea based fertilisers are governed under NBS Scheme. This scheme seeks to provide farmers fertilizers at subsidized rates based on the nutrients they contain.
NBS Regime in Detail
Under the NBS regimen, fertilizers gifted with secondary and micronutrients such as molybdenum (Mo) and zinc attract an additional subsidy. The Government announces the subsidy on P&K fertilizers annually, marking each nutrient on a per kg basis – determined by considering international and domestic prices of P&K fertilizers, exchange rates, country’s inventory level, etc.
The NBS policy aspires to amplify the consumption of P&K fertilizers to attain an optimum balance of NPK fertilization. This helps improve soil health and enhance crop yield thereby, increasing the income of farmers. Launched in April 2010 by the Department of Fertilizers, Ministry of Chemicals & Fertilizers, this policy also aims at promoting rational use of fertilizers to alleviate the pressure of fertilizer subsidy.
Concerning Issues Related to NBS
The NBS scheme has faced several hurdles since its implementation. The prime challenge is the imbalance in the price of fertilisers. Urea doesn’t fall under the NBS scheme and hence remains price-controlled. This discrepancy has led farmers to overuse urea, further aggravating the imbalances in fertilizer usage.
Subsidized urea often ends up being diverted to bulk buyers/traders or non-agricultural users, exacerbating the problem of black marketing. There have also been instances of it being smuggled to neighbouring countries such as Bangladesh and Nepal.
Moreover, the NBS policy heavily burdens the economy as the second-largest subsidy after the food subsidy. It proves detrimental not only to the fiscal health of the economy but also to the soil health of our country.
A Glimpse at the Way Forward
To rectify the imbalance in fertilizer usage, it’s essential for urea to be included under the NBS scheme. One potential approach is to inflate urea prices and concurrently trim down the NBS rates of phosphorus, potash, and sulphur to make other fertilisers more affordable.
Considering that all three nutrients – nitrogen (N), phosphorus (P), and potassium (K) are vital to amplify crop yields and quality, a uniform policy for all fertilisers is required. Over time, NBS should be replaced by a flat per-acre cash subsidy that can be utilized to purchase any fertiliser. This subsidy ought to comprise value-added and customised products containing not only other nutrients, but also those delivering nitrogen more efficiently than urea.
Previous Year Question from UPSC Civil Services Examination
A question from the 2020 edition of the UPSC Civil Services Examination asked candidates to identify correct statements related to chemical fertilizers in India. The candidates needed to demonstrate their understanding of how the retail price of chemical fertilizers operates in Indian markets, how ammonia is produced, and the role of Sulphur in the creation of phosphoric acid fertilizers. The correct answer was the combination of the second and third statements.
