Nutrient-Based Subsidy (NBS) Scheme

Economy and Finance

Nutrient-Based Subsidy (NBS) Scheme

08 Dec 2023 Zinkpot 147

A Nutrient-Based Subsidy (NBS) scheme is a government initiative that provides subsidies on fertilizers based on the nutrients they contain, such as nitrogen (N), phosphorus (P), potassium (K), and sulfur (S).
The scheme aims to ensure that farmers have access to sufficient quantities of these nutrients at statutorily controlled prices, promoting agricultural growth and improving soil health.
Key aspects of the NBS scheme include:
- Subsidy on P&K Fertilizers: The subsidy is announced by the government on an annual basis for each nutrient on a per kg basis, taking into account international and domestic prices of P&K fertilizers, exchange rates, and inventory levels in the country.
- Additional Subsidy for Fortified Fertilizers: Fertilizers fortified with secondary and micronutrients, such as molybdenum (Mo) and zinc, are given additional subsidies.
- Implementation: The NBS scheme is implemented by the Department of Fertilizers under the Ministry of Chemicals & Fertilizers.
- Benefits: The scheme intends to increase the consumption of P&K fertilizers, resulting in an optimal balance (N:P:K = 4:2:1) of NPK fertilization, improved soil health, increased crop yields, and enhanced income for farmers.
However, the NBS scheme has been criticized for putting a significant financial burden on the economy and contributing to the fertilizer subsidy problem.
Some suggestions include replacing the NBS scheme with a flat per-acre cash subsidy that could be used to purchase any fertilizer or value-added customized products containing other nutrients and nitrogen more efficiently than urea.
The NBS does not include Urea-based fertilizers and is available for imported complex fertilizers, except ammonium sulfate.
The major concern with the NBS scheme is the exclusion of Urea from the plan. Farmers are now using more urea than previously because of the increased cost of other deregulated fertilizers. India’s agrochemical usage is quite high and almost 55% of it is urea.
In its non-price policy recommendations for the Karif crops, the Commission for Agricultural Costs and Prices (CACP) recommended that Urea should be brought under the NBS regime to address the problem of imbalance in nutrient usage in agriculture.
There has been excessive use of urea over the years which has contributed to the worsening of plant nutrient imbalance.
This is because urea remains outside the NBS regime, enabling the government to retain direct control over its MRP and subsidy. This discrepancy in pricing has led farmers to overuse urea, neglecting other essential nutrients and causing soil health degradation.