Nutrient Based Subsidy Scheme [Fertilizer Policy] - UPSC Notes

On 22nd April 2020, the Indian Government fixed Nutrient Based Subsidy (NBS) rates for Potassium and Phosphatic fertilizers. Also, the debate always is on the inclusion of Urea in the Nutrient Based Subsidy Scheme. Hence, it is important for the IAS Exam aspirants to know about the NBS.

This article will provide you with relevant facts about the Nutrient Based Subsidy Scheme from the contexts of both the governance and agriculture sections of the UPSC exam.

Get similar important government schemes that are important for UPSC, in the linked article.

Aspirants can check the following links to align their preparation for UPSC Syllabus examination:

What is Nutrient Based Subsidy Scheme?

Nutrient Based Subsidy (NBS) Programme for Fertilizers was initiated in the year 2010. 

  • Under the scheme, a fixed amount of subsidy decided on an annual basis is provided on each grade of subsidized Phosphatic and Potassic (P&K) fertilizers, except for Urea, based on the nutrient content present in them. 
  • The scheme is administered by the Department of Fertilizers under the Ministry of Chemicals & Fertilizers. 
  • In a recent development, the Cabinet Committee on Economic Affairs has approved the proposal of the Department of Fertilizers for the continuation of the Nutrient Based Subsidy (NBS) till 2019-20.
  • The continuation of the Nutrient Based Subsidy Scheme will ensure that an adequate quantity of P&K is made available to the farmers at a statutory controlled price.

Union Budget 2021 and Nutrient Based Subsidy Scheme

There have been no reforms in the Nutrient Based Subsidy Scheme in Union Budget 2021. Though Nirmala Sitharaman made an announcement to release an additional Rs 65,000 crore towards fertilisers subsidy over and above Rs 71,000 crore allocated in the Budget for Fiscal Year (FY) 21 and for FY22, she has allocated close to Rs 80,000 crore.

Nutrient Based Subsidy Scheme (NBS) Provisions 

In India, urea is the only controlled fertilizer and is sold at a statutory notified uniform sale price. 

  • Nutrient Based Subsidy Scheme (NBS) allows the manufacturers, marketers, and importers to fix the MRP of the Phosphatic and Potassic (P&K) fertilizers at reasonable levels. 
  • The domestic and international cost of P&K fertilisers is considered along with the country’s inventory levels and the currency exchange rate in order to decide the MRP.

Aims of the Nutrient Based Subsidy Scheme

The aims of the NBS scheme are the following:

  • The scheme aims at ensuring that a sufficient quantity of P&K is at the farmer’s disposal at statutory controlled prices so that agricultural growth can be sustained and balanced nutrient application to the soil can be ensured.
  • It aims at ensuring the balanced use of fertilizers, improving agricultural productivity, promoting the growth of the indigenous fertilizer industry, and also reducing the burden of subsidy.

Nutrient Based Subsidy Scheme has been implemented with the expectation that it will promote balanced fertilization of the soil, which will lead to increased agricultural productivity and consequently better returns to the farmers.

Urea & Nutrient Based Subsidy Scheme

What is Urea?

It is a white crystalline solid that contains 46 percent of nitrogen as an animal feed additive and fertilizer. It has various uses:

  1. It is used in cropping.
  2. It is also used as a cattle feed supplement.
  3. It is useful for various industries, including industries involved in the production of plastics.

Why is Urea yet not under the Nutrient Based Subsidy Scheme?

As per the latest news, the Indian Government is expected to include urea under the NBS before rolling out the Direct Cash Transfer (DCT) of urea subsidy in farmers’ accounts. Soil health and size of landholdings will be considered to fix the subsidy rate of urea.

  • In 2012, a Sharad Pawar Committee recommended to include urea under NBS.
  • At present, the prices of Urea are controlled by the Government, which fixes the MRP.
  • Urea Subsidy – As per the government definition, “The difference between the delivered cost of fertilizers at farm gate and net market realization by the urea units is given as subsidy to the urea manufacturer/importer by the Government of India.”
  • Urea is covered under the New Pricing Scheme.

To practice previous years’ questions on governance and agriculture, candidates can check the table below:

Governance Questions for UPSC Mains Agriculture Questions for UPSC Mains GS 3

Nutrient Based Subsidy Scheme – UPSC Notes:- Download PDF Here

Frequently Asked Questions about Nutrient-Based Subsidy Regime


What was the expectation of the NBS scheme?

NBS was expected to wean away farmers from applying too much urea containing only nitrogen and increase the consumption of P&K fertilizers which will result in balanced fertilization.

What is DBT in fertilizer?

DBT stands for Direct Benefit Transfer system for fertilizer subsidy payments by the Government of India.
Under the fertilizer DBT system, 100% subsidy on various fertilizer grades shall be released to the fertilizer companies, on the basis of actual sales made by the retailers to the beneficiaries.
Related Links
Pradhan Mantri Matriva Vandana Yojana Commission for Agricultural Costs and Prices
NCERT Notes for UPSC Minimum Support Price (MSP)
UPSC Current Affairs Pradhan Mantri Jan Dhan Yojana


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