New Delhi, Dec. 21 -- India's fertilizer subsidy has long weighed heavily on the exchequer. The revised budget allocation for it in 2024-25 stood at Rs.1.83 trillion. Nitrogen-based urea absorbed over 65% of it, while phosphatic and potassic fertilizers claimed the rest under the nutrient-based subsidy (NBS) regime. The 2025-26 budget allocation is Rs.1.56 trillion. This subsidy is among our largest recurring fiscal commitments and its structure matters as much as its cost.

The current fertilizer subsidy model, introduced in 2017-18, claims to be a direct benefit transfer (DBT), yet it does not reach farmers directly or entirely. The funds are transferred to fertilizer firms, not cultivators. Fertilizer makers are reimbursed only after A...