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