Indian fertilizer subsidy conundrum: Tracking the recent developments

Abstract

Subsidies to fertilizers have played a crucial role in yield improvement in Indian agriculture, yet it is being criticised recently for issues like soil nutrient imbalance, inequity in distribution etc. Several policies are being implemented in India to control scorching fiscal burden due to fertilizer subsidy, control the diversion of subsidised fertilizers and better the soil nutrient balance. Present study was carried out at the Division of Agricultural Economics, ICAR- IARI, New Delhi during 2020–21 to understand the status of fertilizer subsidies in India and its distribution. The prime objective of the study is to assess who benefits from the fertilizer subisides. Secondary data collected from various issues of Fertilizer Statistics, Agricultural Statistics at a Glance, and the Direct Benefit Transfer (DBT) dashboard, as well as on primary data collected from 200 farmers and 60 fertilizer retailsers of Karnal district, Haryana are used for analysis. The farmers, for whom the subsidies are announced, don't seem to get a fair share of it. It is the industry that benefits most from the subsidies, and they have been heavily subsidised especially in the 1990s and after 2010. The stakeholder perception of DBT is in support of the scheme, and both farmers as well as retailers reported increased fertilizer availability after the implementation of the scheme. Aadhar authenticated fertilizer purchase under DBT is hence a welcome development that has the potential to manage the irregularities surrounding the fertilizers to some extent.