The Nutrient Based Subsidy (NBS) Scheme is a central sector scheme launched by the Department of Fertilizers under the Ministry of Chemicals and Fertilizers. It is a policy intervention designed to promote the balanced use of fertilizers and ensure their availability to farmers at affordable prices.
The scheme was introduced on April 1, 2010, to replace the previous product-based subsidy system. The problem it solved was the severe nutrient imbalance in Indian soils, particularly the overuse of nitrogen, which resulted from the old regime's focus on subsidizing only one product, Urea. The NBS scheme aims to rectify this by encouraging the use of Phosphatic and Potassic (P&K) fertilizers.
The mechanism works by providing a fixed amount of subsidy, decided on an annual or bi-annual basis, per kilogram of the four key nutrients: Nitrogen (N), Phosphorus (P), Potash (K), and Sulphur (S). This subsidy is paid to the fertilizer manufacturers or importers based on the nutrient content of the product. Under the NBS, the P&K fertilizer sector is decontrolled, meaning companies can set the Maximum Retail Price (MRP) at reasonable levels, subject to government oversight. The scheme currently covers 28 grades of P&K fertilizers, including Di-Ammonium Phosphate (DAP) and NPKS grades.
The NBS scheme is intrinsically connected to the subsidy policy for Urea, which is notably excluded from the NBS framework and continues to have its MRP fixed by the government. This exclusion is often cited as a reason for the continued imbalance in fertilizer use. Recently, the scheme has been expanded: until Rabi 2023–24, it covered 25 grades, but from Kharif 2024 onward, three additional grades were incorporated, bringing the total to 28 types of P&K fertilizers. The core principle of a fixed per-kilogram subsidy on the four nutrients has remained the same.