Nutrient Based Subsidy (NBS)

• Context (PIB | TH | BS | DTE): GoI has approved Nutrient Based Subsidy (NBS) rates for Rabi Season 2023-24 on Phosphatic and Potassic (P&K) fertilisers.
• GoI has lowered subsidy under the nutrient-based regime for nitrogen, phosphorus, potassium, and sulphur for the Oct-Mar period compared to the Apr-Sept period.

• NBS scheme was launched on 2010 by the Department of Fertilisers, Ministry of Chemical and Fertilisers.
• Under the NBS scheme, farmers ae provided subsidised fertilizers based on their nutrient content, namely, Nitrogen (N), Phosphate (P), Potash (K), and Sulphur (S).
• Moreover, fertilizers fortified with secondary and micronutrients receive additional subsidy.
• Objectives of NBS scheme:
  • To ensure nation’s food security
  • To improve agricultural productivity
  • To ensure the balanced application of fertilizers
• Ambit of NBS: It covers all phosphatic and potassic (P&K) fertilisers except urea.

Issues with NBS Scheme

Increase in Imbalanced Use of Fertilisers

• Urea is not included in the NBS; it remains under price control, and its MRP is officially fixed.
• While there is no price control for fertilisers under the NBS scheme, their prices have increased.
• All these have led the farmers to use more urea, worsening fertiliser imbalance.

Environmental and Economic Cost

• Fertilizer subsidy is the second-biggest subsidy after food subsidy.
• NBS-like schemes promote chemical fertilisers, damaging soil health and costing the economy.

Recommendations of CACP for the NBS Scheme

• Bring Urea under the NBS scheme: To address the imbalanced use of fertilisers.
• Capping the number of subsidised fertiliser bags per farmer: To reduce the GoI’s subsidy burden.

Commission for Agricultural Costs and Prices (CACP) CACP was earlier called Agricultural Prices Commission till 1985. It came into existence in 1965. It is an attached office of the Ministry of Agriculture and Farmers Welfare, GoI. It is mandated to recommend minimum support prices (MSPs). As of now, CACP recommends MSPs of 23 commodities. The recommendations of CACP are not legally binding on the GoI.

Fertilisers of India India is the 2nd largest consumer of urea fertilisers after China. India also ranks 2nd in the production of nitrogenous fertilisers and 3rd in phosphatic fertilisers. The three basic fertilisers of India are Urea, Di Ammonium Phosphate (DAP), and Muriate of Potash (MOP). Urea is India’s most consumed, produced, imported and regulated fertiliser. Urea is subsidised only for agricultural uses. Nutrient Main Source Nitrogen (N) Urea Phosphorous (P) Di Ammonium Phosphate (DAP) Potassium (K) Muriate of Potash (MOP)