• The 10th World Soil Day, celebrated on December 5, 2024, served as a poignant reminder of the critical role soil health plays in sustaining life on Earth.
• Coinciding with this global event, the Fertiliser Association of India (FAI) hosted its annual seminar on Sustainable Fertiliser and Agriculture, to discuss the crucial role of fertilisers in nourishing soils and ensuring food security.
• This year’s theme, Caring for Soils – Measure, Monitor, and Manage, highlighted the urgency of addressing soil degradation and nutrient deficiencies that jeopardise agricultural productivity.

The State of Indian Soils

• Indian soils are alarmingly deficient in essential nutrients. Less than 5% of soils have sufficient nitrogen, 40% are sufficient in phosphate, 32% in potash, and only 20% in organic carbon.
• Furthermore, micronutrient deficiencies—such as sulphur, iron, zinc, and boron—range from moderate to severe.
• Despite these challenges, India remains a global agricultural powerhouse, exporting 85 million tonnes of cereals from 2020-21 to 2022-23 while providing near-free grain to over 813 million people during the pandemic.
• This success is partially attributed to the efforts of the fertiliser industry, which ensures timely availability of nutrients like nitrogen (N), phosphate (P), and potash (K), either through domestic production or imports.

Challenges in Indian Fertiliser Sector

Imbalance in Nutrient Use

• One of the most pressing challenges is the disproportionate use of nitrogen (N) compared to other essential nutrients like phosphorus (P) and potassium (K).
• This imbalance is primarily a consequence of India’s fertiliser subsidy policy, which heavily subsidises urea making it significantly cheaper than other fertilisers like DAP (di-ammonium phosphate) and MOP (muriate of potash).
• As a result, farmers tend to overuse urea, prioritising immediate cost savings over long-term soil health.
• The misuse of fertilisers has led to skewed nutrient application ratios in various states.
• For example, Punjab applies 61% more nitrogen than the recommended dose but underuses potash by 89% and phosphate by 8%.
• Similarly, Telangana overuses nitrogen by 54% while applying 82% less potash and 13% less phosphate.

Low Nutrient Use Efficiency (NUE)

• India’s current fertiliser practices result in low nutrient use efficiency, estimated to be just 35-40%.
• This means that more than half of the fertilisers applied to fields are not absorbed by plants. Instead, they are lost to the environment in various forms.
• Nitrogen, for instance, escapes into the atmosphere as nitrous oxide, a potent greenhouse gas with a warming potential 273 times greater than carbon dioxide.
• This not only exacerbates climate change but also represents a significant economic loss, as the unutilised fertiliser fails to contribute to crop yields.

Subsidy-Driven Distortions

• The fertiliser subsidy system, while intended to support farmers, creates several distortions.
• Urea, which receives the lion’s share of the subsidy (about two-thirds), is priced at approximately $70 per tonne, the lowest globally.
• This artificially low price incentivises excessive use of urea, often at the expense of other nutrients.
• Moreover, unlike DAP and MOP, which were brought under the Nutrient-Based Subsidy (NBS) scheme in 2010, urea remains outside its ambit.
• This exclusion has further widened the price gap between urea and other fertilisers, perpetuating imbalanced nutrient use.
• Diversion and Smuggling of Fertilisers
• A significant portion of subsidised urea, estimated at 20-25%, is diverted for non-agricultural purposes or smuggled to neighbouring countries.
• Urea’s low cost makes it an attractive input for industries like plastics and textiles, while its illegal export fetches higher prices in international markets.
• This diversion deprives Indian farmers of critical resources and increases the financial burden on the government, which must compensate for the subsidized urea lost to misuse.
• Inadequate Focus on Micronutrients
• While macronutrients like N, P, and K dominate the discourse, micronutrients such as zinc, boron, sulphur, and iron receive insufficient attention.
• These elements, though required in smaller quantities, are crucial for plant health and productivity.
• The lack of focus on micronutrients has led to widespread deficiencies in Indian soils, further exacerbating the challenges of declining yields and soil degradation. 

Implications of these Challenges

• The cumulative impact of these issues is far-reaching. Farmers face declining profitability as imbalanced fertiliser use results in suboptimal crop yields.
• Soil health deteriorates over time, reducing the long-term viability of agricultural land.
• On a national scale, the environmental damage caused by inefficient fertiliser use imposes additional economic and ecological costs.
• Furthermore, the inefficiencies in the subsidy system strain government finances, with fertiliser subsidies consuming nearly 4% of the Union budget in the last fiscal year.

Policy Reform to Better the Soil Health

Rationalizing Subsidies

• The current subsidy policy heavily favours urea, making it significantly cheaper than other fertilisers such as di-ammonium phosphate (DAP) and muriate of potash (MOP).
• This has distorted the price signals farmers receive, leading to overuse of nitrogen and underuse of phosphorus and potassium.
• The resulting nutrient imbalance diminishes soil fertility, reduces crop yields, and harms long-term agricultural sustainability.
• Reform is essential to rationalise these subsidies and encourage balanced fertiliser use.

Economic Sustainability

• Fertiliser subsidies constitute a massive financial burden on the government.
• In the last fiscal year, these subsidies amounted to ₹1.88 lakh crore, or nearly 4% of the Union budget.
• Such high expenditure diverts resources from other critical sectors like health and education.
• Reforming the subsidy mechanism could alleviate this fiscal strain while still ensuring affordability for farmers.

Environmental Protection

• Current practices result in low nutrient use efficiency (NUE), with only 35-40% of fertilisers absorbed by crops.
• The remaining portion contributes to environmental pollution, releasing greenhouse gases like nitrous oxide and contaminating water bodies through nitrogen runoff.
• Policy changes could incentivise the adoption of environmentally friendly practices and reduce these harmful effects.

Deregulation of Fertiliser Pricing

• A critical step is to deregulate fertiliser prices, allowing market forces to determine pricing.
• Farmers can be compensated through direct income support, such as digital coupons or cash transfers, enabling them to purchase fertilisers based on need rather than distorted price signals.
• This approach would incentivise the efficient use of nutrients while promoting innovation and competition within the fertiliser industry.

Expansion of the Nutrient-Based Subsidy (NBS) Scheme

• While DAP and MOP are already part of the NBS scheme, urea remains excluded.
• Bringing urea under the NBS scheme would help correct the price imbalances between nitrogen, phosphorus, and potassium.
• This move could encourage more balanced nutrient use and reduce the over-reliance on nitrogen. 

Road ahead

• Reforming India’s fertiliser sector offers multifaceted benefits. It can enhance agricultural productivity, improve farmers’ profitability, and reduce environmental damage.
• A balanced and efficient use of NPK and micronutrients will rejuvenate Indian soils, paving the way for sustainable agriculture.
• Furthermore, deregulation could elevate the fertiliser industry to global prominence, much like India’s pharmaceutical sector in human health.