Fertiliser Subsidies - A Boon or A Bane?

Accelerating rate of progress in agriculture sector for any economy serves as powerful engine of growth. A progressive agriculture acts as a strong and sustaining base for progress and development of other sectors of the country. In order to accelerate and boost economic growth after independence, the Government of India adopted various methods and polices, the provision of „Subsidies" being one of them. The genesis of input subsidies in Indian agriculture can be traced from the philosophy and objectives of agriculture development strategy launched during the mid-sixties. The Government of India adopted agriculture input subsidies as agriculture continues to be mainstay for livelihood of rural people. Also, the input subsidies helped in balancing the conflicting interests of farmers and consumers, which further help achieving various macro and micro objectives. Chemical fertilisers bear a direct relationship with food grain production, along with a number of supporting factors like High Yielding Varieties (HYVs) of seeds, irrigation, access to credit, etc. Studies have shown that around 50 to 60 per cent of the enhanced food grains production during 1960s and 1970s could be attributed to increase use of fertilisers. Agriculture input subsidies, particularly the fertiliser subsidy, have led to significant increase in agriculture production and productivity, which in turn has contributed to increase in food availability, higher real wages, wider economic growth and poverty reduction. Green revolution, with simultaneous application of fertilisers, HYVs, irrigation, etc., transformed India into a nation could feed itself. However, in recent years, it has been seen that agriculture production has declined, despite of increase in fertiliser subsidy. Even the Economic Survey 2013-14 points towards the higher subsidy burden leading to higher food prices while having “zero or negative” impact on agricultural output. NBS subsidy regime has made soil imbalances in its nutrients as this policy is skewed heavily in favour of Urea, leading to its imprudent and unabated use. Moreover, continuous use, in fact the overuse, of fertilisers has resulted in declining crop yields, and has led to the deleterious effect on soil fertility as well as on sustainability of agriculture system and subsequent degradation of environment. This paper aims to highlight whether fertiliser subsidy is a boon or a bane in the present era.