{"id":360689,"date":"2026-04-13T22:40:16","date_gmt":"2026-04-13T17:10:16","guid":{"rendered":"https:\/\/forumias.com\/blog\/?page_id=360689"},"modified":"2026-04-13T22:40:16","modified_gmt":"2026-04-13T17:10:16","slug":"answered-evaluate-the-integration-of-fertilizer-subsidies-with-pm-kisan-through-direct-transfers-analyze-its-efficacy-in-ensuring-food-security-and-curbing-resource-diversion","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-evaluate-the-integration-of-fertilizer-subsidies-with-pm-kisan-through-direct-transfers-analyze-its-efficacy-in-ensuring-food-security-and-curbing-resource-diversion\/","title":{"rendered":"[Answered] Evaluate the integration of fertilizer subsidies with PM-KISAN through direct transfers. Analyze its efficacy in ensuring food security and curbing resource diversion."},"content":{"rendered":"

Introduction<\/strong><\/h2>\n

The Economic Survey of India 2025\u201326 flags India\u2019s fertiliser subsidy exceeding \u20b92.5 lakh crore, urging efficiency. Integrating subsidies with PM-KISAN via DBT is debated to curb leakages and ensure food security.<\/p>\n

From Input Support to Income Support<\/strong><\/h2>\n

The proposal to club fertilizer subsidy funds with PM-KISAN into a single per-acre cash transfer represents a paradigm shift from subsidizing inputs to directly supporting farmer incomes.<\/p>\n\n\n\n\n\n\n\n
Area<\/strong><\/td>\nCurrent Regime (Price Control)<\/strong><\/td>\nProposed Regime (Direct Transfer)<\/strong><\/td>\n<\/tr>\n
Subsidy Mechanism<\/strong><\/td>\nIndirect subsidy to manufacturers\/importers<\/td>\nDirect cash transfer to farmers<\/td>\n<\/tr>\n
Urea Price to Farmer<\/strong><\/td>\nFixed at \u20b9242\/bag (since 2012)<\/td>\nMarket-determined (freed)<\/td>\n<\/tr>\n
Incentive Structure<\/strong><\/td>\nOveruse and diversion incentivized<\/td>\nJudicious use encouraged<\/td>\n<\/tr>\n
Fiscal Predictability<\/strong><\/td>\nVolatile (\u20b92.55 lakh crore in FY23)<\/td>\nFixed budget outlay<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Potential Benefits<\/strong><\/p>\n

    \n
  1. Price Signal Correction:<\/strong> Freeing fertilizer prices would allow farmers to respond to market signals. NITI Aayog advocates that farmers paying full urea price (\u20b91,100\/bag) would receive higher MSP, as the cost-plus formula (C2+50%) would increase procurement prices.<\/li>\n
  2. Fiscal Savings for Reinvestment:<\/strong> The OECD estimates India has the most negative Producer Support Estimate (-14.5% of gross farm receipts) among monitored countries, implying domestic producers are implicitly taxed. Savings from rationalized subsidy (estimated \u20b930,000-40,000 crore annually) could fund agricultural R&D, which saw its budget cut 4.8% in 2026-27.<\/li>\n
  3. Environmental Co-Benefits:<\/strong> Current imbalanced use (N:P:K at 10.9:4.1:1) contributes to soil degradation, nitrate leaching, and nitrous oxide emissions (273x CO2). Direct transfers would incentivize balanced nutrient application and promote alternatives like Nano-Urea (90% Nutrient Use Efficiency).<\/li>\n<\/ol>\n

    Critical Risks:<\/strong><\/p>\n

      \n
    1. Price Volatility Exposure:<\/strong> Global urea prices surged 65% in 40 days during recent conflicts (from $482 to $795\/tonne). Without price caps, small and marginal farmers (86% of landholdings) could face unaffordable inputs during geopolitical shocks.<\/li>\n
    2. Tenant Identification:<\/strong> Inadequate land records risk benefits going to absentee landlords rather than actual cultivators.<\/li>\n<\/ol>\n
        \n
      1. Price Volatility Exposure<\/strong>: Global shocks could make fertilisers unaffordable even with cash transfers. Example: 2026 West Asia crisis pushing urea prices to $795\/tonne.<\/li>\n
      2. Behavioural Factors<\/strong>: Cash may be diverted to non-agricultural needs, especially among indebted farmers.transfers.<\/li>\n<\/ol>\n

        Efficacy in Curbing Resource Diversion<\/strong><\/h2>\n
          \n
        1. The current regime\u2019s low administered price (\u20b9242 per 45-kg bag) creates huge arbitrage, leading to industrial diversion and smuggling.<\/li>\n
        2. DBT removes this incentive by delinking subsidy from product purchase. However, success depends on robust Aadhaar-linked land records and grievance mechanisms. Without these, diversion may shift from fertiliser to cash itself.<\/li>\n
        3. The Economic Survey 2025-26 has explicitly recommended a modest increase in urea prices coupled with direct income transfers to farmers on a per-acre basis. The Survey further recommends zone-specific transfers indexed to cropping patterns, leveraging Aadhaar-linked fertilizer sales data and the PM-KISAN platform<\/li>\n<\/ol>\n

          Way Forward<\/strong><\/h2>\n
            \n
          1. Phased DBT Implementation: <\/strong>Pilot DBT integration in selected states before nationwide rollout. Example: District-level pilots with real-time monitoring.<\/li>\n
          2. Dynamic Subsidy Indexation: <\/strong>Link cash transfers to global fertiliser price indices to protect farmers from volatility.<\/li>\n
          3. Strengthening Land Records: <\/strong>Accelerate digitisation under Digital India Land Records Modernization Programme (DILRMP).<\/li>\n
          4. Promoting Balanced Nutrient Use: <\/strong>Incentivise P & K fertilisers and discourage excessive nitrogen use. Example: Triple Super Phosphate (TSP).<\/li>\n
          5. Enhancing Extension Services: <\/strong>Use Soil Health Cards and agri-extension to guide optimal fertiliser usage.<\/li>\n
          6. Boosting Domestic Production: <\/strong>Encourage green ammonia, nano-urea, and indigenous fertiliser manufacturing.<\/li>\n<\/ol>\n

            Conclusion<\/strong><\/h2>\n

            Sustainable agriculture needs efficiency and innovation; integrating subsidies with DBT must balance farmer welfare, productivity, and national food security imperatives.<\/p>\n","protected":false},"excerpt":{"rendered":"

            Introduction The Economic Survey of India 2025\u201326 flags India\u2019s fertiliser subsidy exceeding \u20b92.5 lakh crore, urging efficiency. Integrating subsidies with PM-KISAN via DBT is debated to curb leakages and ensure food security. From Input Support to Income Support The proposal to club fertilizer subsidy funds with PM-KISAN into a single per-acre cash transfer represents a… Continue reading [Answered] Evaluate the integration of fertilizer subsidies with PM-KISAN through direct transfers. Analyze its efficacy in ensuring food security and curbing resource diversion.<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-360689","page","type-page","status-publish","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/360689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=360689"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/360689\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=360689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}