Nutrient Based Subsidy(NBS) Scheme

• 30 Oct 2025

Source: PIB

Why in News? 

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilizers for the Rabi season 2025–26 (from October 1, 2025 to March 31, 2026).

• The move aims to ensure affordable fertilizer availability for farmers while reflecting the latest global price trends of fertilizer inputs.

What is the Nutrient Based Subsidy (NBS) Scheme?

• About: The Nutrient Based Subsidy (NBS) Scheme, is a central sector scheme launched in 2010 by the Department of Fertilizers, Ministry of Chemicals and Fertilizers.
  • It aims to make Phosphatic and Potassic (P&K) fertilizers available to farmers at affordable prices while promoting balanced nutrient application for sustainable agriculture.
• Key Features of NBS Scheme:
  • Coverage: 28 grades of P&K fertilizers, including Di-Ammonium Phosphate (DAP) and NPKS grades.
  • Subsidy Based on Nutrient Content:  Provides a fixed amount of subsidy per kilogram of nutrient (Nitrogen (N), Phosphorus (P), Potash (K), and Sulphur (S)) is decided on an annual or bi-annual basis.
    • The subsidy is provided to the manufacturers/importers based on nutrient content in each fertilizer.
  • Special support: Government may provide additional subsidy (e.g., for DAP) to stabilize prices during global volatility.
  • Decontrol of P&K Sector: P&K fertilizers are decontrolled under NBS. Fertilizer companies can fix the Maximum Retail Price (MRP) at reasonable levels, which are monitored by the Government to ensure affordability.
  • Urea exclusion: Urea is not covered under NBS; its MRP is fixed at Rs 242 per 45-kg bag since 2018.
• Significance of the Scheme: Ensures continuous supply of essential fertilizers at affordable prices. 
  • Promotes nutrient balance and reduces overuse of nitrogen-based fertilizers.
  • Enhances transparency and fiscal discipline in subsidy management.
  • Supports soil health management and sustainable agricultural practices.

What are the Challenges with Nutrient Based Subsidy (NBS)?

• Imbalanced Fertilizer Use: Urea’s exclusion from NBS and its low fixed price have led to overuse of nitrogen and underuse of P&K nutrients. 
  • Long-term soil degradation threatens agricultural sustainability and food security.
• Rising fertilizer prices: Rising prices of non-urea fertilizers have increased farmers’ input costs despite subsidies. Price volatility discourages balanced fertilizer use and affects crop profitability.
• Fiscal strain: Fertilizer subsidy is India’s second-largest after food, adding significantly to the fiscal deficit. Increasing global prices further strain the subsidy budget and limit funds for other rural schemes.
• Import Dependence and Vulnerability: India's high import dependence (25% for urea, 90% for phosphates, and 100% for potash) exposes it to global price shocks.
  • Any disruption in global supply chains directly impacts fertilizer availability and affordability.
• Environmental Impact: Overuse of nitrogen-rich fertilizers contributes to groundwater pollution and greenhouse gas emissions. Declining soil organic content affects long-term soil resilience and ecological balance.

What Reforms Needed to Strengthen India’s Nutrient Based Subsidy (NBS) Scheme?

• Bring Urea under the NBS framework: As recommended by the Commission for Agricultural Costs and Prices (CACP) include urea in the NBS to ensure uniform subsidy treatment for all major nutrients. This will promote balanced fertilizer use and reduce the overdependence on nitrogen.
• Link subsidies to Soil Health: Align fertilizer subsidies with Soil Health Card data to encourage region-specific nutrient application. Promote customized fertilizer blends suited to local agro-climatic conditions.
• Cap Excessive Subsidy Usage: Introduce a limit on the number of subsidized fertilizer bags per farmer to prevent diversion and misuse.
  • Target subsidies better using Aadhaar-linked and Direct Benefit Transfer (DBT) systems.
• Encourage Organic and Bio-fertilizers: Provide financial incentives for using organic, bio, and nano fertilizers alongside chemical ones. This can improve soil health and reduce chemical dependency.
• Promote awareness and training: Educate farmers on balanced fertilizer use and sustainable nutrient management through Krishi Vigyan Kendras (KVKs) and extension services.

Conclusion

The NBS scheme marks a key shift toward balanced and sustainable fertilizer use. To realize its full potential, India must rationalize subsidies, and promote integrated nutrient management.  Strengthening reforms can make India’s fertilizer policy more sustainable and farmer-centric.

Drishti Mains Question:

Q. Examine the objectives and limitations of the Nutrient Based Subsidy (NBS) Scheme. How can policy reforms reconcile farmer welfare with fiscal sustainability?

Frequently Asked Questions

1. What is the Nutrient Based Subsidy (NBS) Scheme?
The Nutrient Based Subsidy (NBS) Scheme, launched on 1 April 2010, provides a fixed subsidy (₹/kg) on nutrients N, P, K and S for 28 grades of P&K fertilisers, paid to manufacturers/importers to keep retail prices affordable.

 2. How does excluding urea from NBS affect fertiliser use?
Urea’s separate price control (fixed MRP) encourages nitrogen over-application, causing nutrient imbalance, soil degradation, and underuse of phosphatic and potassic fertilisers

3. What are the main fiscal and supply risks in current fertiliser policy?
Fertiliser subsidy is India’s second-largest subsidy, creating fiscal pressure; high import dependence for P&K exposes India to global price shocks and supply disruptions.

UPSC Civil Services Examination, Previous Year’s Question (PYQs)

Prelims

Q. With reference to chemical fertilizers in India, consider the following statements: (2020)

1. At present, the retail price of chemical fertilizers is market-driven and not administered by the Government.
2. Ammonia, which is an input of urea, is produced from natural gas.
3. Sulphur, which is a raw material for phosphoric acid fertilizer, is a by-product of oil refineries.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 2 only

(d) 1, 2 and 3

Ans: (b)

Q. Why does the Government of India promote the use of ‘Neem-coated Urea’ in agriculture? (2016)

(a) Release of Neem oil in the soil increases nitrogen fixation by the soil microorganisms.

(b) Neem coating slows down the rate of dissolution of urea in the soil.

(c) Nitrous oxide, which is a greenhouse gas, is not at all released into atmosphere by crop fields.

(d) It is a combination of a weedicide and a fertilizer for particular crops.

Ans: (b)

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Mains

Q. How do subsidies affect the cropping pattern, crop diversity and the economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (2017)

Q. In what way could replacement of price subsidy with direct benefit Transfer (DBT) change the scenario of subsidies in India? Discuss. (2015)

Q. What are the different types of agriculture subsidies given to farmers at the national and at state levels? Critically, analyse the agricultural subsidy regime with reference to the distortions created by it. (2013)