Direct Benefit Transfer in Fertilizer Subsidy System
The Government of India continues to implement the Direct Benefit Transfer (DBT) system for fertilizer subsidies as of 2025. This system ensures that subsidies reach farmers directly through fertiliser companies based on actual sales verified by Aadhaar authentication at retail points. The scheme guarantees subsidised fertiliser supply to all farmers without discrimination.
DBT in Fertilizers
Under the DBT system, fertiliser companies receive 100% subsidy on various fertiliser grades based on actual sales to farmers. Sales are authenticated through Point of Sale (PoS) devices linked to the beneficiaries’ Aadhaar numbers. This method prevents diversion and ensures transparency. All farmers, irrespective of size, access fertilisers at subsidised rates. The scheme operates on a no-denial basis, meaning any Aadhaar-verified farmer can purchase fertilisers with subsidy benefits.
Subsidy Distribution and Financial Figures
From the financial year 2022-23 to 2025-26 (up to July 21, 2025), the government released a total fertiliser subsidy of approximately ₹6,76,679 crore. This includes subsidies on imported and indigenous Phosphatic & Potassic (P&K) fertilisers and urea. The subsidy on indigenous urea forms the largest component, followed by imported urea and P&K fertilisers. Subsidy amounts have shown a declining trend from ₹2,54,799 crore in 2022-23 to ₹49,330 crore in the current year till July 2025, reflecting possible policy adjustments and market factors.
Pricing and Subsidy Mechanism for Urea
Urea is sold to farmers at a statutorily fixed Maximum Retail Price (MRP). As of 2025, a 45 kg bag of urea costs ₹242, excluding neem coating and applicable taxes. The government compensates manufacturers and importers by paying the difference between the actual cost delivered to farm gates and the MRP. This ensures farmers pay a uniform subsidised price regardless of market fluctuations.
Nutrient Based Subsidy Policy for P&K Fertilisers
Since April 2010, the Nutrient Based Subsidy (NBS) policy applies to Phosphatic and Potassic (P&K) fertilisers. Under NBS, subsidies are fixed annually based on nutrient content. Fertiliser companies set the MRP according to market conditions but within government monitoring to keep prices reasonable. This system allows farmers to benefit from subsidies while companies maintain some pricing flexibility.
Role of Aadhaar Authentication and PoS Devices
Aadhaar-based authentication at retail shops is central to the DBT system. PoS devices installed at fertiliser outlets verify the buyer’s identity and record the sale. This process eliminates fake or duplicate beneficiaries and reduces leakages. It also supports the no-denial policy, allowing all genuine farmers to receive subsidised fertilisers without restrictions.
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