Fertiliser Subsidy DBT: Shivraj Singh Chouhan Backs Direct Transfer to Farmers

Union Agriculture Minister Shivraj Singh Chouhan has supported the long-discussed proposal to implement fertiliser subsidy Direct Benefit Transfer (DBT) to farmers’ bank accounts. Speaking at the annual Kisan Mela organised by the Indian Agricultural Research Institute (IARI) in New Delhi, the minister said the reform is feasible and officials should begin designing a practical mechanism.

Chouhan highlighted that the government currently spends over ₹1.70 lakh crore on fertiliser subsidies, which are routed through companies. He suggested that this amount could instead be transferred directly to farmers, ensuring greater transparency and reducing leakages.

Fertiliser Subsidy DBT Could Improve Transparency

The minister explained that farmers receive fertilisers at heavily subsidised prices. At present, a 45-kg urea bag costs ₹266, while a 50-kg DAP bag costs about ₹1,350. However, actual market prices are much higher, with the government bridging the gap through subsidies.

Chouhan also noted complaints that farmers sometimes fail to receive adequate supplies despite large subsidies and strong availability. In certain regions, subsidised urea has reportedly been diverted away from intended beneficiaries. Therefore, fertiliser subsidy DBT could improve targeting and reduce diversion.

Current Subsidy Structure Under Nutrient-Based Scheme

Under existing policy, urea remains fully controlled by the government. Meanwhile, companies set retail prices for non-urea fertilisers after factoring fixed nutrient subsidies announced before each cropping season.

The current subsidy rates are:

• Nitrogen (N): ₹43.02/kg

• Phosphorus (P): ₹47.96/kg

• Potash (K): ₹2.38/kg

• Sulphur (S): ₹2.87/kg

The government allocated around ₹49,000 crore for P&K subsidy at the budget estimate stage, which later rose to ₹60,000 crore in revised estimates. For the next fiscal, allocation has been set at ₹54,000 crore, despite India’s heavy import dependence in this segment.

Challenges and Debate Around Fertiliser Subsidy DBT

While supporting discussion on the reform, Chouhan acknowledged the need for consensus and careful design. Policymakers and experts have flagged potential challenges, including higher upfront costs for farmers.

NITI Aayog member Ramesh Chand recently said fertiliser DBT is complex and lacks a single solution. He observed that if DBT were implemented, farmers might have to initially pay over ₹2,000 per urea bag before subsidy reimbursement, which could affect affordability.

An official study further indicated that 65% of farmers purchased 5–7 urea bags annually in 2024-25, while fertiliser consumption remained concentrated in certain districts. This uneven usage pattern adds another layer of complexity to DBT design.

Outlook: Reform Debate Likely to Gain Momentum

The minister’s remarks have revived the policy debate on fertiliser subsidy reform. Supporters believe fertiliser subsidy DBT could improve efficiency, transparency, and fiscal management. However, concerns over farmer affordability and implementation challenges remain significant.

Going forward, consultations with stakeholders, policy think tanks, and agricultural institutions are expected to shape the roadmap for any potential transition.

📊 Key Fertiliser Subsidy Snapshot