Key Messages

Solutions suggested time and again seem to focus on loan waivers and minimum support prices, which may not prove effective in the long run. We need to focus on supply-side factors as well, most importantly on boosting productivity and yield quality.

India's fertiliser subsidy policy has been in favour of urea, leading to the severe overuse and, in turn, significant environmental and economic consequences. Economically, it has led to massive leakages, diversion for non-agricultural purposes, and subsidy arrears, which eventually cause a fiscal deficit. The policy regime must be made uniform for all types of fertilisers, to promote an optimal nitrogenous-phosphatic-potassic (NPK) ratio. Moreover, providing subsidies isn't a sustainable model. It is vital to explore policy options to complement, if not replace, subsidies that will help boost and sustain productivity.