Nutrient Based Subsidy (NBS) Scheme
The Cabinet Committee on Economic Affairs has given its approval for fixation of Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) Fertilizers for the year 2020-21.
Background of the NBS Scheme
Government is making available fertilizers, namely Urea and 21 grades of P&K fertilizers to farmers at subsidized prices through fertilizer manufacturers/importers. The subsidy on P&K fertilizers is being governed by NBS Scheme. In accordance to its farmer friendly approach, the Govt. is committed to ensure the availability of P&K fertilizers to the farmers on affordable price. The subsidy would be released to fertilizer companies as per above rates so that they can make available fertilizers to farmers at a cheaper price than it would have been otherwise.
Significance of the NBS Scheme
- Under the scheme, a fixed amount of subsidy, based on the nutrient content present in them is provided on each grade of subsidized Phosphatic and Potassic (P&K) fertilizer except Urea.
- It was expected that the NBS scheme will control farmers from applying too much urea containing only nitrogen.
Methods of providing subsidies under NBS Scheme
- In the case of non-urea fertilisers, MRP has been De-regularised and the government pays a flat per-tonne subsidy on the basis of nutrients mix in the fertiliser, to ensure they are priced at “reasonable levels”.
- The per-tonne subsidy is currently Rs 10,231 for di-ammonium phosphate (DAP), Rs 6,070 for muriate of potash (MOP) and Rs 8,380 for the popular ‘10:26:26’ complex fertiliser, due to their mix of nutrients. That is why the decontrolled fertilisers price way above the Urea.
How to claim subsidy under NBS Scheme?
- Before 2018, fertiliser companies were receiving subsidies after their bagged material had been dispatched and received at a district’s railhead point or approved godown.
- In 2018, Direct Benefit Transfer (DBT) system was introduced. Now, Fertiliser companies receive subsidies after the actual sales of fertilisers to farmers.
- Around 2.3 lakh retailers all around the country have point-of-sale (PoS) machinery. PoS machines are linked to the Department of Fertilisers’ e-Urvarak DBT portal.
- Anyone buying fertilisers has to provide their Aadhaar unique identity or Kisan Credit Card number. PoS devices will capture details like quantities of the individual fertilisers purchased, along with the buyer’s name and biometric authentication.
- Now on the basis of this registered information on the e-Urvarak platform, a company can claim the subsidy.
What are major Issues Related to NBS scheme?
- The urea remains under price control and NBS has been implemented only in other fertilisers.
- The price of fertilisers (other than urea), which were decontrolled have gone up from 2.5 to four times during these 10 years. However, since April 2010, the price of urea has been raised by hardly 11%.
- This has led to farmers using more urea than before, which has further worsened fertiliser imbalance.
- Considering that fertilizer subsidy is the second-biggest subsidy after food subsidy, the NBS policy is not only damaging the fiscal health of the economy but also proving detrimental to the soil health of the country.
- Subsidised urea is getting diverted to bulk buyers/traders or even non-agricultural users such as plywood and animal feed makers.
