Cabinet approves Rs 41,534 cr P&K fertilisers subsidy for kharif 2026 season
In a strategic move to enhance agricultural output, the government has rolled out a substantial subsidy of Rs 41,534 crore aimed at supporting Phosphatic and Potassic fertilizers. Set for the 2025-26 kharif season, this investment represents a promising 12 percent increase from last year.
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Context
The has approved a ₹41,534 crore subsidy for Phosphatic and Potassic (P&K) fertilizers under the scheme for the Kharif 2026 season. This forms part of a massive ₹1.71 lakh crore budgetary allocation for fertilizer subsidies in FY 2026-27, aimed at ensuring agricultural inputs remain affordable for farmers.
UPSC Perspectives
Economic
The fertilizer subsidy is a massive component of India's Revenue Expenditure (government spending that does not create assets), significantly impacting the fiscal deficit. Under the scheme launched in 2010, the government provides a fixed rate of subsidy per kilogram on nutrients like Nitrogen (N), Phosphate (P), Potash (K), and Sulphur (S). Crucially, while urea remains strictly controlled with a government-fixed Maximum Retail Price (MRP), non-urea fertilizers like Di-ammonium Phosphate (DAP) and Muriate of Potash (MoP) are decontrolled. This means their retail prices are determined by market manufacturers, but the government cushions the cost by providing a fixed subsidy per nutrient to the companies. For UPSC Prelims, it is essential to remember this distinction: Urea is price-controlled, while P&K fertilizers are price-decontrolled but heavily subsidized.
Agricultural
The core objective behind introducing the was to promote balanced fertilization and improve soil health. The ideal NPK (Nitrogen, Phosphorus, Potassium) ratio for Indian soils is traditionally considered to be 4:2:1. However, because urea (nitrogen) was kept out of the NBS and remains artificially cheap, farmers tend to severely overuse urea compared to P&K fertilizers. This skewed usage distorts the NPK ratio, often pushing it to 8:3:1 or worse in states like Punjab and Haryana. Overuse of urea not only depletes soil micro-nutrients but also causes groundwater contamination through nitrate leaching. Understanding the mismatch between the well-intentioned NBS scheme and the realities of urea pricing is a frequent theme in UPSC Mains questions regarding agricultural sustainability.
Governance
The institutional mechanism for determining and distributing these subsidies involves multiple high-level bodies. The , chaired by the Prime Minister, has the final authority to approve subsidy rates and major economic policies. The actual implementation and monitoring of fertilizer availability are managed by the under the Ministry of Chemicals and Fertilizers. Furthermore, the government has been pushing for governance reforms in this sector, such as the introduction of the system in fertilizers (where subsidy is released to companies only after actual sales to farmers via Point of Sale machines) and the promotion of Nano Urea to reduce the import burden. Candidates must be able to link the role of the CCEA in fertilizer subsidies just as they do for the Minimum Support Price (MSP) recommendations.