The Nutrient Based Subsidy (NBS) scheme is a policy intervention, specifically a centrally sponsored scheme, administered by the Department of Fertilizers under the Ministry of Chemicals and Fertilizers. It was introduced on April 1, 2010, to replace the earlier product-based subsidy system for non-urea fertilizers. The scheme was created to solve the problem of imbalanced fertilizer use, which resulted from the price distortion caused by the heavily subsidized and price-controlled urea, leading to the overuse of nitrogen and underuse of Phosphatic and Potassic (P&K) fertilizers. The primary goal is to promote balanced fertilization to improve soil health and agricultural productivity.
The mechanism of the NBS scheme involves the government fixing a subsidy amount per kilogram for the four key nutrients: Nitrogen (N), Phosphorus (P), Potassium (K), and Sulphur (S). This fixed subsidy is provided to fertilizer manufacturers and importers based on the nutrient content of the fertilizer grade. The scheme covers P&K fertilizers, including Di-Ammonium Phosphate (DAP) and various NPKS grades, with 28 grades currently included as of Kharif 2024. Unlike urea, which remains under statutory price control with a fixed Maximum Retail Price (MRP), the NBS scheme allows companies to set the MRP for P&K fertilizers at reasonable levels, subject to government oversight. The subsidy is passed on to the farmers at the point of sale, ensuring the availability of essential nutrients at affordable prices.
The NBS scheme is closely connected to the Fertilizer Control Order and the broader goal of agricultural sustainability. Recent changes include the expansion of the scheme's coverage from 25 to 28 P&K fertilizer grades from Kharif 2024 onward, incorporating variants fortified with micronutrients like Zinc and Boron. The subsidy rates per nutrient are revised periodically, often annually or biannually, to account for fluctuations in international prices of fertilizers and raw materials. The core principle of linking the subsidy to the nutrient content, rather than the final product price, has remained the same since its inception in 2010.