Government Schemes and Policies for Fertilizer Use and Farmer Support

Fertilizers are critical agricultural inputs regulated under the Essential Commodities Act, 1955. The Department of Fertilizers oversees production, imports, and pricing to ensure adequate availability for farmers at affordable prices. Government schemes balance fiscal subsidies with balanced plant nutrition, promote bio-fertilizers, and provide direct financial transfers to protect farm incomes across India.

Core Fertilizer Pricing and Subsidy Schemes

The Union Government administers distinct subsidy regimes for nitrogenous fertilizers and non-urea phosphatic and potassic nutrients.

Urea Subsidy and Neem Coating Policy

• The Central Government fixes the maximum retail price (MRP) of urea statutorily, reimbursing the difference between production costs and retail price to manufacturers.
• The New Urea Policy (NUP) promotes domestic energy efficiency, establishes plant-wise energy consumption norms, and incentivizes production beyond reassessed capacities.
• In 2015, the government mandated 100% neem coating on all subsidized agricultural urea to slow nitrogen release and stop commercial diversion to non-agricultural industries.
• The “One Nation, One Fertilizer” scheme, launched under the Pradhan Mantri Bhartiya Janurvarak Pariyojana (PMBJP), mandates all companies to market subsidized fertilizers under a single brand name, “Bharat” (e.g., Bharat Urea, Bharat DAP).

Nutrient Based Subsidy (NBS) Scheme

• Implemented in April 2010 for Phosphatic and Potassic (P&K) fertilizers, replacing the earlier concession scheme.
• An annual or bi-annual fixed subsidy per kilogram is announced for primary nutrients: Nitrogen (N), Phosphorus (P), Potassium (K), and Sulfur (S).
• Manufacturers determine open-market MRPs at reasonable levels, while the government provides per-kilogram nutrient subsidies based on product composition.
• The scheme covers secondary and micronutrient-fortified grades, including zinc-fortified and boron-fortified complexes, to correct soil deficiencies.

Modern Schemes Promoting Balanced Fertilization

Excessive urea application distorts soil health. New policies promote alternative bio-inputs, organic farming, and technological innovations.

PM-PRANAM Scheme

• The “PM Programme for Restoration, Awareness, Generation, Nourishment and Amelioration of Mother Earth” was approved in 2023.
• The scheme provides no separate budget allocation. Instead, 50% of the fertilizer subsidy saved by a state by reducing chemical fertilizer use is transferred to that state as an unconditional grant.
• States utilize PRANAM grant funds for asset creation, village-level bio-fertilizer infrastructure, and farmer awareness campaigns.

Promotion of Nano Fertilizers and Bio-Inputs

• The Fertilizer Control Order (FCO) was amended to formally include Nano Urea and Nano DAP developed through indigenous nanotechnology.
• Foliar application of liquid nano fertilizers targets plant leaves directly, reducing chemical run-off and soil degradation.
• The GOBARdhan initiative and Market Development Assistance provide financial assistance of ₹1,500 per metric tonne to scale the sale of Fermented Organic Manure (FOM) from biogas plants.

Soil Health Card (SHC) Scheme

• Launched in February 2015 from Suratgarh, Rajasthan, under the Ministry of Agriculture and Farmers Welfare.
• Assesses 12 parameters: macro-nutrients (N, P, K), secondary nutrients (S), micronutrients (Zn, Fe, Cu, Mn, Bo), and physical parameters (pH, EC, Organic Carbon).
• Issues cyclic soil diagnostic cards to farmers with customized crop-wise chemical and organic fertilizer dosage recommendations.

Direct Farmer Income Support and Procurement Policies

Financial assistance schemes ensure liquidity for input purchases before sowing seasons.

Direct Benefit Transfer (DBT) in Fertilizers

The Department of Fertilizers implemented the Fertilizer DBT system nationwide to track sales down to retail outlets.

Working Mechanism of Fertilizer DBT

• Subsidies are not paid upfront to manufacturers. Instead, companies receive subsidies after retail point-of-sale (PoS) transactions occur.
• Retailers authenticate farmers using Aadhaar-based biometric PoS devices, logging buyer identities and purchased quantities.
• The Integrated Fertilizer Management System (iFMS) tracks real-time inventory movements from factories and ports down to local cooperative societies.

Regulatory Framework for Chemical and Bio-Fertilizers

Quality, manufacturing, and distribution of fertilizers are governed under strict central orders.

Essential Control Orders

• Fertilizer (Control) Order (FCO), 1985: Issued under Section 3 of the Essential Commodities Act, 1955. It mandates quality specifications for chemical fertilizers, bio-fertilizers, organic manures, and nano-inputs.
• Fertilizer (Movement Control) Order, 1973: Empowers the Central Government to prohibit or direct the inter-state transit of fertilizers to prevent local shortages.
• Inspectors authorized under the FCO draw legal samples at production plants and retail shops, with non-compliant batches resulting in cancellations and criminal penalties.

Important Facts

• Urea contains 46% elemental nitrogen and accounts for over half of all chemical fertilizer consumption in India.
• Diammonium Phosphate (DAP) contains 18% Nitrogen (N) and 46% Phosphorus (P_{2O_5}).
• Muriate of Potash (MOP) contains 60% Potassium (K_2O) and is entirely imported into India because the country lacks domestic commercial potash reserves.
• Single Super Phosphate (SSP) contains 16% Phosphorus (P_{2O_5}) and 11% Sulfur (S), making it an economical alternative to DAP for oilseeds and pulses.
• The ideal N:P:K application ratio for Indian soils is 4:2:1, but actual average application rates heavily skew toward excess nitrogen.
• The Department of Fertilizers functions under the Ministry of Chemicals and Fertilizers, while the Soil Health Card scheme operates under the Ministry of Agriculture and Farmers Welfare.
• The PM-KISAN scheme is a Central Sector Scheme with 100% funding from the Government of India.
• The Fertilizer Control Order was amended to incorporate customized fertilizers tailored to region-specific soil test profiles.
• The first commercial nano urea liquid manufacturing facility was inaugurated at Kalol, Gujarat.
• Under the One Nation One Fertilizer directive, 66.67% of fertilizer bag space is reserved for the Bharat brand logo and scheme details, leaving 33.33% for company names.
• Indigenous urea units run on imported liquefied natural gas (RLNG) and domestic natural gas as their primary feedstock.
• The Price Deficiency Payment Scheme (PDPS) under PM-AASHA compensates registered farmers directly for the price difference between the market selling price and the MSP for oilseeds.