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Amid escalating geopolitical conflicts in the Middle East and Eastern Europe, global supply chains for chemical fertilisers and natural gas have faced severe disruptions, causing import prices to soar. This editorial by agricultural economist Ashok Gulati argues that India must urgently reform its fertiliser pricing and distribution policies—through rationing or cash transfers—to ensure food security, curb a ballooning subsidy bill, and prevent environmental degradation. The piece highlights the structural flaws in India's current urea policy and suggests actionable alternatives.
India currently imports roughly 70 percent of its chemical fertilisers, making its agricultural sector highly vulnerable to global supply chain shocks. While phosphorus and potassium fertilisers are governed by the Nutrient Based Subsidy regime, urea remains heavily subsidized and under strict price control. This creates a massive price arbitrage—with domestic urea sold to farmers at less than 800—leading to rampant smuggling and diversion to non-agricultural industries. To resolve this, experts recommend shifting to a Direct Benefit Transfer system where the subsidy is given directly to farmers in cash, freeing up open market prices. However, clubbing this with existing schemes like PM-KISAN presents a challenge, as the current database primarily identifies landowners and structurally excludes vulnerable tenant farmers who are the actual cultivators.
The artificial cheapening of urea has severely distorted India's ideal N:P:K (Nitrogen, Phosphorus, Potassium) ratio, leading to gross over-application of nitrogenous fertilisers. Granular urea, as applied in India, has a very low Nutrient Use Efficiency (NUE) of just 35 to 40 percent, meaning the plant absorbs less than half of the applied nutrient. The unabsorbed nitrogen leads to severe ecological consequences: it volatilizes into the atmosphere as nitrous oxide (a greenhouse gas 273 times more potent than carbon dioxide) and leaches into groundwater. This nitrate contamination of groundwater is the primary cause of methemoglobinemia (blue baby syndrome) and other health issues. Shifting policy support towards liquid urea applied via fertigation (drip irrigation), which boasts an NUE of nearly 90 percent, is crucial for scaling up sustainable and natural farming initiatives.
Addressing the fertiliser crisis requires robust state-level governance and legal interventions to enforce quantitative rationing. Under the Essential Commodities Act, 1955, the government has the legal mandate to regulate the supply and distribution of fertilisers to ensure equitable access and prevent hoarding. The Centre could mandate a 10-15 percent cut in urea supplies, compelling states to rationally allocate fertilisers based on digitized land records, crop typologies, and scientific dosages recommended by agricultural universities. Furthermore, policy design must pivot toward smarter product formulations. For instance, replacing Di-ammonium Phosphate (DAP), which unnecessarily adds 18 percent nitrogen, with Triple Super Phosphate (TSP) that provides only phosphorus. Incentivizing domestic production of Triple Super Phosphate would correct nutrient imbalances, reduce import dependence on Gulf nations, and significantly lower the urea subsidy burden.