Fertiliser Shortages Amid Monsoon Boom

Fertiliser Shortages Amid Monsoon Boom: Balancing Demand Surges with Supply Resilience

The mismatch between rising fertiliser demand due to an exceptional 2025 southwest monsoon and supply-side constraints highlights the systemic tension between demand-driven policy intervention and supply chain resilience. Fertilisers, as critical agricultural inputs, are directly linked to food security and rural livelihoods, placing the issue at the core of India’s agricultural and economic frameworks.

This interplay also raises questions regarding structural deficiencies in India's fertiliser manufacturing, import dependency, and subsidy mechanisms. Critically examining this issue allows greater understanding of how India grapples with the twin challenges of resource management and equitable access.

UPSC Relevance Snapshot

• GS-I: Role of monsoon and agriculture, impact on fertilizer use.
• GS-III: Agriculture: Subsidies, resource management, self-reliance (Atmanirbhar Bharat).
• Essay: Themes on sustainable agriculture and food security.

Institutional Framework and Key Policies

India’s fertiliser sector operates within a highly regulated and heavily subsidised framework. The policy landscape aims to address both fertiliser affordability for farmers and domestic production sustainability. The contradiction lies in simultaneously achieving subsidy-driven affordability while mitigating fiscal pressures and ensuring supply adequacy.

• Key Policies and Schemes:
  • Urea Subsidy Scheme: Ensures availability of urea at an MRP of ₹242 per 45 kg bag, despite the production cost being approximately ₹3,000 per bag.
  • Nutrient-Based Subsidy (NBS) Policy: Introduced in 2010, it promotes the balanced use of key nutrients — Nitrogen (N), Phosphorus (P), Potash (K), and Sulphur (S) — by providing fixed subsidies for each nutrient.
  • PM PRANAM: Incentivizes states/UTs to promote the balanced use of chemical fertilizers and bio-fertilizers.
  • One Nation One Fertilizer: Focuses on branding standardization and transparency in the fertiliser supply chain.
• Funding: The 2025–26 budget allocated ₹1.19 lakh crore and ₹0.49 lakh crore for the urea subsidy and the NPK subsidy, respectively. This replicates previous patterns of large-scale fiscal commitments to the sector.

Key Issues and Challenges

1. Demand-Surge and Inadequate Domestic Production

• India’s domestic production of urea declined from 102.1 lakh tonnes (April–July 2024) to 93.6 lakh tonnes (April–July 2025) despite an exceptional southwest monsoon boosting kharif sowing activity.
• Di-Ammonium Phosphate (DAP), crucial for sustained crop growth, saw negligible growth, with production stagnating at 13.7 lakh tonnes (April–July 2025).

2. Over-Reliance on Imports

• India imports a significant proportion of its fertiliser requirements, primarily from China. Supply restrictions imposed by China during 2025 disrupted import flows, leading to shortages.
• Lack of diversified import sources renders India susceptible to global supply chain disruptions.

3. Subsidy Burden and Fiscal Stress

• The subsidized pricing mechanism (~₹242 per 45 kg urea bag) masks the true fertiliser cost (~₹3,000 per bag), intensifying fiscal commitments.
• Exorbitant subsidies often limit investments in modernisation and domestic capacity expansion.

4. Unsustainable Fertiliser Usage Patterns

• Overuse of chemical fertilisers has led to long-term soil health degradation, creating a need for balanced nutrient application through bio-fertilizers or nano-urea.
• Farmers' limited awareness of soil health management practices exacerbates uneven fertiliser usage.

Comparison: India vs. Global Fertiliser Metrics

Critical Evaluation

The 2025 fertiliser shortages underscore the limitations of India’s supply planning during favourable monsoon periods. While schemes like PM PRANAM and NBS promote resource efficiency, their implementation remains undermined by inadequate infrastructure and farmer awareness. Excessive reliance on China for imports highlights vulnerabilities in India's sourcing strategy.

However, long-term solutions like capacity expansion under Atmanirbhar Bharat, diversification of import sources, and wider adoption of innovative technologies (e.g., nano-urea, bio-fertilisers) remain underutilised. Further, the subsidy framework’s emphasis on affordability risks sustainability by downplaying cost-recovery mechanisms.

Structured Assessment

• Policy Design Adequacy: Initiatives like One Nation One Fertilizer and PM PRANAM aim at resource optimization but need better implementation strategies.
• Governance and Institutional Capacity: Weak import diversification and lagging domestic production indicate insufficient institutional coordination.
• Behavioural/Structural Factors: Farmers’ dependency on traditional fertilisers and low awareness of balanced nutrient practices contribute to inefficiency and overuse.

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