Nutrient Based Subsidy (NBS)

Context

The Cabinet Committee on Economic Affairs, chaired by Prime Minister, has given itsapprovalfor fixation of Nutrient Based Subsidy (NBS) rates for Phosphaticand Potassic (P&K) Fertilizers for the year 2020-21.

Details:

  • The CCEA also approved the inclusion of a complex fertilizer namely Ammonium Phosphate (NP 14:28:0:0) under the NBS Scheme.
  • Fertilizer and food are two major subsidy components in the central government’s annual spending.

Background:

  • Government is making available fertilizers, namely Urea and 21 grades of P&K fertilizers to farmers at subsidized prices through fertilizer manufacturers/importers.
  • The subsidy on P&K fertilizers is being governed by NBS Scheme w.e.f 01.04.2010.
  • In accordance to its farmer friendly approach, the Govt. is committed to ensure the availability of P&K fertilizers to the farmers on affordable price.
  • The subsidy would be released to fertilizer companies as per above rates so that they can make available fertilizers to farmers at a cheaper price than it would have been otherwise.
  • In India currently urea is the only controlled fertilizer and is sold at a statutory notified uniform sale price.
  • Nutrient Based Subsidy (NBS) allows manufacturers, marketers, and importers to fix the Maximum Retail Price (MRP) of Phosphatic and Potassic (P&K) fertilizers at reasonable levels.
  • This MRP is decided considering 
    • Domestic and international prices of P&K fertilizers
    • Inventory level in the country 
    • The exchange rates