India's Fertilizer Subsidy Architecture

The Indian government maintains a comprehensive fertilizer subsidy regime to ensure affordable access to agricultural inputs for farmers. For urea — the most widely used nitrogenous fertilizer — the Nutrient-Based Subsidy (NBS) scheme does not apply; instead, urea is sold at a fixed maximum retail price (MRP) of ₹242 per 45-kg bag (recently revised), regardless of the actual cost of production or import. The difference between the cost price and the subsidised retail price is borne by the government through direct transfers to fertilizer manufacturers and importers. This mechanism insulates farmers from global price volatility but makes the government's budget extremely sensitive to international fertilizer prices. When input costs rise — as they are now — the subsidy bill expands automatically and can impose significant fiscal stress.