India's fertiliser subsidy needs reform beyond digital verification

The objective should be to improve targeting without making access to an essential agricultural input conditional on the perfection of land records

fertiliser
Allocation for fertiliser subsidies for 2026-27 stands at about ₹1.71 trillion, but expenditure could be substantially higher this year due to higher international prices owing to the West Asia crisis
Business Standard Editorial Comment
3 min read Last Updated : Nov 09 2026 | 10:31 PM IST
In a year when the subsidy bill is expected to increase, the 37.56 per cent reported decline in fertiliser sales in select border districts during the 2026 kharif season has come as a relief, following the introduction of  digital verification of purchases. The decline was registered after linking purchases to farmer IDs, land records, and crop requirements through AgriStack and other digital platforms. The diversion of subsidised urea for industrial use and across borders has been a long-standing concern. The decline in offtake offers a fresh indication of the potential scale of leakage. The price differential is substantial: A 45-kg bag of urea is available to Indian farmers for about ₹265, against an estimated global landed price of ₹1,674 (September). Predictably, the fiscal implications are also significant. Allocation for fertiliser subsidies for 2026-27 stands at about ₹1.71 trillion, but expenditure could be substantially higher this year due to higher international prices owing to the West Asia crisis. Even for 2025-26, expenditure is estimated to have reached ₹2.11 trillion, around 26 per cent above the Budget Estimate of ₹1.68 trillion and 13.4 per cent higher than the Revised Estimate of ₹1.86 trillion.
 
Against this backdrop, the Framework for Fertiliser Sales (FFS) is a welcome intervention by the Union government. It links the farmer’s digital identity and verified land records with crop requirements before a purchase is completed. Combined with the existing Integrated Fertiliser Management System, the framework can help identify unusual purchase patterns, monitor district-level consumption, and rationalise subsidy distribution. The decline in fertiliser sales in districts covered under the pilot also suggests that the potential benefits extend beyond border areas. However, changes in cropping patterns and lower rain this year also need to be accounted for in the decline in fertiliser sales.
 
Equally important is ensuring that digital verification does not exclude legitimate cultivators. Tenant farmers, sharecroppers and those cultivating land with incomplete or disputed records may find it difficult to establish their eligibility. Since land ownership and cultivation are not always aligned, linking access too closely to land records may risk making the system less inclusive. The objective should be to improve targeting without making access to an essential agricultural input conditional on the perfection of land records.
 
More fundamentally, better monitoring alone cannot correct the distortions embedded in India’s fertiliser policy. Urea, the major source of nitrogen (N) remains heavily subsidised, while phosphatic (P) and potassic (K) fertilisers are relatively expensive. This encourages excessive nitrogen application at the expense of other essential nutrients. India’s N:P:K consumption ratio stood at 9.3:3.5:1 in 2024-25 against the commonly cited agronomic benchmark of 4:2:1. The resulting imbalance has implications for soil health, nutrient efficiency, and overall agricultural productivity. The government should also use digital infrastructure not merely to track fertiliser transactions but to move towards a more rational subsidy regime. Gradual price rationalisation, better-designed direct benefit transfers, and stronger incentives for balanced nutrient application can reduce both diversion and excessive fertiliser consumption. Soil-health cards and crop-specific fertiliser recommendations can inform these changes. Potential savings on fertiliser subsidies will enable the government to spend more on growth-augmenting asset creation.
 
   

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
*Subscribe to Business Standard digital and get complimentary access to The New York Times

Smart Quarterly

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Exclusive premium stories online

  • Premium stories handpicked daily by our editors

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :Business Standard Editorial CommentEditorial Commentfertiliser subsidyUrea

First Published: Nov 09 2026 | 10:31 PM IST

Next Story