Digital intervention: Fiscal efficiency can work together with soil revival

Linking urea sales to digital farmer IDs could curb leakages and fiscal waste-but only a phased, inclusive rollout can protect farmers and revive soil health

As reported by this newspaper last week, the Union government is planning to link urea sales with digital farmer IDs (identities) under Agri Stack, starting with pilots in select districts. This would be an important step towards reforming India’s management of fertiliser subsidies. The aim is to reduce leakages, prevent misuse, and make subsidy spending more efficient. The urgency is clear. Fertiliser subsidies are projected to reach ₹1.9 trillion in 2025-26, well above the Budget Estimate of ₹1.68 trillion. Over the past decade, such subsidies remained broadly stable at ₹65,000 crore to ₹80,000 crore between 2010-11 and 2019-20, before surging sharply after 2020, rising to ₹1.57 trillion in 2021-22. 

Despite decades of high spending, outcomes in fertiliser use and soil health remain weak. Urea consumption continues to rise, with 31.15 million tonnes sold between April and December 2025, nearly 4 per cent higher than in the same period last year. Heavy subsidies on urea have distorted nutrient use, skewing the nitrogen-phosphorus-potassium (NPK) ratio and encouraging excessive nitrogen application. Over time, this has reduced soil organic carbon and depleted essential micronutrients, weakening soil health and limiting yield gains. India is also heavily dependent on imports. This financial year, fertiliser imports rose by about 76 per cent to nearly $18 billion, with especially sharp increases in urea and diammonium phosphate (DAP). Imports expose India to global price volatility and external shocks, increasing fiscal uncertainty and import dependence. 

The policy backdrop also includes a broader push to digitise agricultural services. Over 70 million farmers have digital IDs linked to land records under the Digital Agriculture Mission, with coverage expected to expand further. This digital foundation aims to make government schemes more transparent, targeted, and data-driven. However, challenges remain. Land records are still fragmented and unevenly updated across states, limiting their reliability. At the same time, digital literacy varies widely across rural India, and access to the internet that is reliable remains uneven. These gaps raise concerns about exclusion. If fertiliser subsidies are tightly linked to digital identities without adequate safeguards, marginal and tenant farmers, many of whom lack clear land documentation or struggle with digital interfaces, could be left out. This risk is relevant particularly because informal tenancy remains widespread and ownership records do not always reflect who actually cultivates the land. 

This makes the design of the reform as important as its intent. Thus, a phased rollout can help align fiscal objectives with soil sustainability and farm productivity. Such an approach shifts the focus from simply limiting fertiliser use to improving how fertilisers are used. Expenditure efficiency and soil revival are not competing goals. With well-designed digital linkage, science-based advisories, and strong inclusion safeguards, India can restrain subsidy growth while restoring soil health and improving long-term agricultural productivity. Improved fiscal efficiency will also allow the government to increase capital expenditure in the agricultural sector.