Union Government of India is planning to implement one of the biggest reforms in policy related to Agriculture. The Fertilizer subsidy policy is on the anvil. The history of this policy dates back to the era of Green revolution. Government started subsidising chemical fertilizers heavily since then. The method adopted was indirect subsidy through the industry, wherein the Government fixes the maximum retail prices of all the major fertilizer products. The difference between cost of production and retail price was paid to the industry.  The heavy subsidy on chemical fertilizer products catalyzed indiscriminate use of these chemicals which in turn led to wide spread soil degradation, yield stagnation and even decline in yield.

The Government has already acknowledged this issue, and is now proposing a nutrient based subsidy system as the solution. 

While delivering budget speech, Union Finance Minister said, "In the context of the nation’s food security, the declining response of agricultural productivity to increased fertilizer usage in the country is a matter of concern.  To ensure balanced application of fertilizers, the Government intends to move towards a nutrient based subsidy regime instead of the current product pricing regime.... In due course it is also intended to move to a system of direct transfer of subsidy to the farmers.”

As per this new system, Govt. will fix subsidy amount for each nutrient.  Accordingly the subsidy for a fertilizer product will depend on the amount of nutrients in the product.  Govt. also plans to replace the existing indirect subsidy system with a direct subsidy system, wherein the subsidy money will be transferred to farmers’ account directly, as and when he/she purchases chemical fertilizers by using Kissan credit cards provided.

But the big question is: can this move restore soil health and ensure food security?

In fact the soils are degraded due to years of indiscriminate use of chemicals and these soils can be rejuvenated only through ecological farming practices and addition of organic matter in the soil. However, this policy reform ignores this fact completely.

Subsidy for promotion of ecological/organic fertilization is the need of the hour. The feasibility of a shift to ecological fertilization is often challenged on the lines that enough organic materials are not available. A recent Greenpeace India report , Subsidising Food Crisis, finds that amount of nitrogen that could be potentially recovered in organic residues available in the country is similar to the total amount of synthetic nitrogen applied to Indian soils every year, 14 Mt. This highlights the potential feasibility of a complete shift from synthetic to organic nitrogen fertilisation. However Govt. needs to seriously look into various ways and means to support the recycling of organic wastes and for promoting eco-friendly farming practices.

Also, while implementing the new reforms the environmental and social impacts of the same needs to be assessed in a comprehensive manner.