Scheme
Nutrient Based Subsidy (NBS) Scheme
GS3 Agriculture: Subsidies and fertilisersPrelims and Mains
- Why in news
- On 5 January 2026, PIB explained the Nutrient-Based Subsidy rates for Rabi 2025-26 (1 October 2025 to 31 March 2026), with a tentative outlay of about ₹37,952 crore.
- What it is
- The Nutrient Based Subsidy scheme gives a fixed per-kg subsidy on the nutrients N, P, K and S in phosphatic and potassic fertilizers. It is run by the Department of Fertilizers and the subsidy is paid to manufacturers and importers, not to farmers directly. Rates are set separately for each season, so that companies sell fertilizers at affordable prices.
- Kharif 2025 budget
- The budget for Kharif 2025 was Rs 37,216.15 crore.
- Grades covered
- 28 grades of P&K fertilizers, including DAP and NPKS grades, are made available at subsidized prices.
- Who receives the subsidy
- The subsidy goes to fertilizer companies as per notified rates.
- Implementing department
- The scheme is run by the Department of Fertilizers, under the Ministry of Chemicals and Fertilizers.
- What it subsidises
- A fixed subsidy on phosphatic and potassic fertilizers, including DAP. Rates depend on each fertilizer's nutrient content and are revised periodically.
- Nutrients covered
- The scheme promotes balanced use of nitrogen, phosphorus, potassium and sulphur.
- Current rates period
- The approved NBS rates for Rabi 2025-26 apply from 1 October 2025 to 31 March 2026.
- Fortified fertilizers
- P&K fertilizers fortified or coated with micronutrients such as boron and zinc are eligible for subsidy, and they get an additional per-tonne subsidy.
- Urea outside NBS
- Urea is not under NBS. Its price is controlled separately, and it is neem-coated.
- Who runs it
- The Department of Fertilizers, Ministry of Chemicals and Fertilizers, administers NBS. The subsidy goes to manufacturers and importers, not directly to farmers.
- Start date
- NBS came into effect on 1 April 2010 and links subsidy to nutrient content.
- Profit caps
- Reasonable profit over cost of production is up to 8% for importers, 10% for manufacturers and 12% for integrated manufacturers. Excess is recovered.
- Overcharging
- Charging above the printed MRP is punishable under the Essential Commodities Act, 1955.
Don’t confuse with NBS vs Urea subsidy: NBS gives per-kg nutrient-based subsidy on P&K fertilizers. Urea has a fixed maximum retail price, and the government pays the difference to producers.
Don’t confuse with NBS vs Soil Health Card: NBS is a price subsidy to fertilizer companies. The Soil Health Card gives farmers plot-wise soil test results and fertilizer advice.
Don’t confuse with iFMS vs DBT: iFMS is the web portal that tracks fertilizer production, movement and stock. NBS subsidy goes to companies, not as a farmer cash transfer.
Schemes: 52 Prelims questions since 2013, 10 in Prelims 2026 alone. They test features, the period and who funds it. In Mains, 33 news-triggered questions, mostly GS3.
Why it matters
- Keeps DAP and NPK fertilizers affordable for farmers as global prices change.
- Supports food security and sustains crop output in Kharif.
- Links subsidy to nutrient content, which encourages balanced use of N, P, K and S rather than urea alone.
- Fortification incentives promote micronutrient use, helping soil health.
- Promotes balanced use of N, P, K and S, helping soil health.
- Keeps fertilizer affordable for farmers while letting prices reflect global trends.
- Supports domestic P&K output and self-reliance.
Problems
- Rising global fertilizer prices increase the subsidy bill and strain the fiscal position.
- Imbalanced use of N, P and K continues, with excess urea use harming soil health.
- Urea stays far cheaper than P&K fertilizers, so nitrogen-heavy use continues and nutrient imbalance persists.
- The subsidy bill depends on global fertilizer prices and import dependence for P&K inputs.
- Urea stays cheaper than P&K, so N-heavy use and nutrient imbalance persist.
- Heavy dependence on imported raw materials and DAP exposes the subsidy bill to global prices.
- Subsidy goes to companies, so leakage, diversion and weak targeting of farmers remain risks.
Way forward
- Promote balanced fertilizer use through soil health cards and nano fertilizers.
- Improve targeting and move gradually towards direct benefit transfer.
- Move towards soil-test-based fertilizer advice, using Soil Health Cards, with subsidy linked to nutrient need.
- Rationalise urea and P&K prices to reduce distortion and the fiscal burden.
- Move towards a uniform nutrient-based policy including urea, with soil-health-card-based advice.
- Expand domestic capacity and diversify import sources.
- Use iFMS and direct benefit transfer to improve targeting and cut diversion.
Put in your answer
NBS outlay: More than ₹2.04 lakh crore was allocated between 2022-23 and 2024-25 for indigenous and imported P&K fertilizers.
Soil Health Card reach: Over 25.55 crore soil health cards had been distributed as of mid-November 2025.
PM-PRANAM incentive: States that cut chemical fertilizer use get incentives equal to 50 percent of the subsidy savings.
Foodgrain yield: Foodgrain yields rose from 1,930 kg/ha in 2010-11 to 2,578 kg/ha in 2024-25.
Allocation: More than ₹2.04 lakh crore was allocated under NBS from 2022-23 to 2024-25.
- 2013Mains GS3 · Q5Types of farm subsidies and their distortions in the agricultural subsidy regime
- 2026Mains GS3 · Q14Types of agricultural subsidies in India and WTO Agreement on Agriculture issues
- 2015Mains GS3 · Q5Effect of replacing price subsidy with DBT on subsidies
- 2023Mains GS3 · Q14Direct and indirect farm subsidies in India and WTO concerns
- 2016Prelims Q24Why does government promote neem-coated urea in agriculture?
- 2017Prelims Q72Does the Soil Health Card scheme check fertilizer overuse and aid balanced use?
- 2020Prelims Q91Advantages of fertigation, including efficient phosphatic fertilizer application and nutrient availability
- 2020Prelims Q94Statements on fertilizer retail pricing, ammonia and sulphur sources
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statements
Ours, not from a UPSC paper
Consider the following statements:
- 1.The Nutrient Based Subsidy scheme for Phosphatic and Potassic fertilizers has been in force since 1 April 2010.
- 2.Under the scheme, the subsidy is paid directly to farmers' bank accounts.
- 3.The Nutrient Based Subsidy scheme is administered by the Department of Agriculture and Farmers Welfare.
Which of the statements given above is/are correct?
True or false?
1 of 11
Statements the way Prelims prints them. Say first, then see the fact.
1.The NBS rates for Kharif 2026 are for Urea as well as P&K fertilizers.
False. They cover only Phosphatic and Potassic fertilizers; Urea is outside NBS and its price is controlled separately.
2.Under the scheme, the subsidy is paid directly to farmers' bank accounts.
False. The subsidy is given to fertilizer companies, manufacturers and importers.
3.The government makes 28 grades of P&K fertilizers available under the scheme.
True. The release states 28 grades including DAP.
4.The NBS scheme is administered by the Department of Agriculture and Farmers Welfare.
False. It is administered by the Department of Fertilizers.
5.The Nutrient-Based Subsidy scheme came into effect on 1 April 2010.
True. NBS has been effective since 1 April 2010.
6.Under NBS, the subsidy is determined by the nutrient content (N, P, K, S) of the fertilizer.
True. Subsidy is linked to nutrient composition of each grade.
7.Under NBS, the government fixes the MRP of P&K fertilizers directly.
False. The P&K sector is decontrolled; companies set MRP at reasonable levels under government oversight.
8.The NBS scheme covers 28 grades of P&K fertilizers at present.
True. Grades rose from 25 to 28.
9.Urea is one of the fertilizers whose price is set through the NBS scheme.
False. NBS covers P&K fertilizers; urea is outside it and has a statutory MRP.
10.Overcharging above the printed MRP on a fertilizer bag is punishable under the Essential Commodities Act, 1955.
True. The Essential Commodities Act, 1955 applies.
11.Reasonable profit margin for importers under NBS is 12% over cost.
False. Importers 8%, manufacturers 10%, integrated manufacturers 12%.
Written by us from the release, not by UPSC; checked by a second model.
Worth revising until Prelims 2027: most news questions come within two years of the event.