Nutrient Based Subsidy (NBS) Scheme
Background and Need
- Before 1992, the Government of India regulated the prices of all fertilizers.
- In 1992, Phosphatic (P) and Potassic (K) fertilizers were decontrolled. Their prices shot up.
- Farmers, naturally, shifted towards the cheaper option – Nitrogen (N) fertilizers, whose price was still controlled.
- This imbalanced use of N, P, and K nutrients degraded soil fertility and lowered crop productivity.
- To handle this problem, the government initially introduced an ad-hoc Concession Scheme (1992–2010) for P&K fertilizers. Finally, in 2010, the Nutrient Based Subsidy (NBS) Scheme was launched.
What is NBS Scheme?
- Instead of giving subsidy per bag of fertilizer, subsidy is linked to the nutrient content of fertilizers – mainly Nitrogen (N), Phosphorus (P), Potash (K), and Sulphur (S).
- This ensures that farmers get fertilizers at a reasonable price and also promotes balanced use of nutrients in soil.
Purpose and Type
- Purpose: To provide fertilizers to farmers at subsidized prices and ensure food security, agricultural productivity, and soil health.
- Type: It is a Central Sector Scheme (fully funded by the Central Government).
Who decides the subsidy?
- An Inter-Ministerial Committee (IMC) recommends the per nutrient subsidy rate before the start of each financial year.
- Subsidy is decided per kg of nutrient (‘N’, ‘P’, ‘K’, ‘S’).
- IMC also recommends additional subsidy for fertilizers fortified with secondary nutrients and micro-nutrients.
Key Features
- Subsidy Payment
- Paid directly to fertilizer companies through Direct Benefit Transfer (DBT).
- Companies then sell fertilizers at reduced retail prices to farmers.
- Freight Subsidy
- Government also provides freight concession for transport of decontrolled fertilizers via road and rail.
- Customized Fertilizers
- Companies making mixture/customized fertilizers can source subsidized raw fertilizers.
- However, no separate subsidy is given on their sale.
- Technology-driven Monitoring
- Integrated Fertilizer Monitoring System (iFMS) tracks everything: production, movement, stock, sale, subsidy claims, and payments.
Benefits of NBS Scheme
- Improves soil fertility and increases crop productivity.
- Reduces overuse of Nitrogen fertilizers and promotes balanced fertilization.
- Brings down the fertilizer subsidy burden by rationalizing its use.
- Encourages sustainable agriculture and reduces environmental degradation.
Obligations of Fertilizer Companies under NBS
- Transparency in Pricing
- Must print Maximum Retail Price (MRP) along with subsidy details on fertilizer bags.
- Selling above MRP is punishable under the Essential Commodities Act, 1955.
- Cost Data Submission
- Required to submit certified cost data to check if MRPs are reasonable.
- Reporting
- Regularly report MRPs of P&K fertilizers to the Department of Fertilizers.
✅ In summary: The NBS scheme ensures fertilizers are affordable, nutrient use is balanced, and subsidy is efficiently targeted. It is a classic example of how policy balances farmers’ needs, government budget, and environmental concerns.