Green Revolution to Resilience: Why India's Fertiliser Policy Needs an Update

A gradual transition to more targetet, efficient subsidy delivery may be preferable to sudden price liberalisation.

After interest payments and food subsidies, fertiliser subsidy will become the third largest single budget expenditure this year.

(Image: Kamran Akhtar/ The Quint)

India’s fertiliser policy has been one of the foundational pillars of the country’s agricultural transformation. Affordable fertiliser access, public support to farmers, and expansion of domestic production enabled India to move from chronic food shortages in the 1960s to broad foodgrain self-sufficiency within a few decades.

Fertiliser support, particularly during and after the Green Revolution, contributed significantly to yield growth, stabilised farm incomes, and supported national food security objectives.

Today, however, Indian agriculture faces a different set of challenges. The question is no longer merely how to increase production, but how to sustain productivity growth while improving nutrient efficiency, preserving soil health, managing fiscal pressures, and reducing vulnerability to global supply disruptions.

The next phase of fertiliser policy reform is therefore less about dismantling the existing framework and more about modernising it to suit contemporary agricultural, environmental, and geopolitical realities.

In Need of Stronger Agricultural Policy

A stronger policy conversation has become necessary because the scale of the fertiliser economy itself has expanded dramatically. India today is the world’s second-largest fertiliser consumer after China, consuming nearly 33 million tonnes of nutrients annually, and over 70 million tonnes of fertiliser products. Fertiliser consumption has risen from only about 65,000 tonnes in 1950–51 to current levels due to the combined expansion of irrigation, high-yielding seed varieties, and public subsidy support.

At the same time, subsidy expenditure has grown sharply. Central fertiliser subsidy outlays increased from around Rs 12,695 crore in 2001–02 to nearly Rs 99,495 crore during the global commodity shock of 2008–09, and consolidated subsidy expenditure in recent years has remained in the range of Rs 1.7–2 lakh crore annually.

While these expenditures have played an important stabilising role for Indian agriculture, their rising fiscal magnitude underscores the importance of improving the efficiency and targeting of support.

Moving from quantity-focused support to efficiency-focused support

India’s fertiliser policies were originally designed in an era when the overriding national objective was maximising cereal production. That objective was successfully achieved. However, changing cropping patterns, evolving soil conditions, and widening regional diversity now require a more efficiency-oriented approach to nutrient management.

Striking a Balance

One important area for policy refinement is nutrient balance. The current system has understandably prioritised affordable nitrogen access through heavily subsidised urea. Yet agricultural research increasingly demonstrates that optimal nutrient application varies substantially across crops, soils, and agro-climatic regions.

Empirical work by agricultural economists has shown that the widely cited national 4:2:1 NPK ratio is not universally appropriate across India’s diverse agricultural landscape.

In several states, particularly those with lateritic or potassium-deficient soils, the agronomically optimal nutrient mix differs significantly from traditional Green Revolution norms.

Recent evidence also suggests that India’s nutrient imbalance problem is more regionally differentiated than often assumed. Contrary to the perception of uniform nitrogen overuse, empirical estimates indicate that only a limited number of states show nitrogen application above agronomic requirements, while many others continue to under-apply nutrients due to inadequate access, weak extension systems, or high relative prices of phosphatic and potassic fertilisers.

This implies that future policy may gradually move toward region-specific nutrient management supported by soil-health data, district-level agronomic recommendations, and digital agricultural platforms already being developed by the Government of India.

The objective should not be reducing support to farmers, but improving the efficiency and productivity impact of that support.

Strengthening Soil Health the Next Frontier

One of the major achievements of Indian agriculture has been sustained yield growth over several decades. Preserving this momentum now requires greater attention to soil quality and long-term nutrient-use efficiency.

Agricultural research indicates that fertiliser response rates in some regions have declined significantly over time. Studies cited in the literature show that crop response ratios fell from nearly 25 kilograms of grain per kilogram of fertiliser in the 1960s to roughly 8 kilograms by the 1990s in certain intensive cultivation belts. This reflects not merely nitrogen use, but also growing deficiencies in secondary nutrients and micronutrients such as sulphur, zinc, boron, and iron.

The challenge therefore is increasingly one of integrated nutrient management rather than simply expanding bulk NPK application. The Soil Health Card initiative already provides an important institutional foundation for this transition.

Expanding the effectiveness of soil-testing infrastructure, farmer advisory systems, precision-application practices, and micronutrient management can help improve productivity while reducing input wastage.

The environmental dimension is equally important. Long-term imbalance in fertiliser application has contributed in some regions to soil degradation, groundwater nitrate contamination, declining organic carbon content, and lower nutrient-use efficiency. Research also links excessive nitrogen application with higher nitrous oxide emissions, an important greenhouse gas. Future policy, therefore, has to balance productivity objectives with sustainability considerations.

In the medium term, precision agriculture technologies — including satellite-based advisory systems, AI-enabled nutrient mapping, remote sensing, and variable-rate application tools — could significantly improve fertiliser-use efficiency. India’s ongoing digital agriculture initiatives create an opportunity to integrate soil science, agronomy, and subsidy delivery into a more data-driven nutrient management framework.

Building a More Resilient Fertiliser Supply Chain

Recent geopolitical events have highlighted the strategic importance of fertiliser security. India’s fertiliser sector remains deeply linked to global markets for natural gas, phosphatic inputs, and potash, making international supply disruptions an increasingly important policy concern.

Although India has expanded domestic production capacity, effective dependence on imported fertiliser feedstocks and finished products remains substantial.

Recent estimates suggest that once imported natural gas, phosphoric acid, and rock phosphate are incorporated into calculations, India’s effective dependence on global fertiliser supply chains rises to nearly 68–70 percent.

The geopolitical concentration of imports further increases vulnerability. A significant share of India’s LNG imports originates from Gulf countries, while phosphatic fertiliser imports depend heavily on suppliers such as Saudi Arabia, Morocco, Jordan, and China. Recent geopolitical tensions in West Asia and disruptions following the Russia–Ukraine conflict demonstrated how quickly global fertiliser prices can rise, directly affecting subsidy expenditure and domestic agricultural costs.

The Government of India has already taken important steps through overseas joint ventures, diversified sourcing arrangements, revival of domestic urea capacity, and strategic diplomatic engagement with supplier nations. Going forward, additional emphasis on long-term import diversification, overseas mineral partnerships, strategic reserves, green ammonia technologies, and alternative energy pathways could further strengthen resilience.

In particular, investments in green hydrogen and green ammonia production may offer India an opportunity to simultaneously improve energy security, reduce long-term production costs, and align agricultural policy with broader climate-transition objectives.

Reform Through Gradualism, not Disruption

The history of fertiliser policy demonstrates that reforms in this sector must be carefully sequenced and politically sensitive because fertilisers directly affect food production and farmer livelihoods. Abrupt deregulation in a sector so closely tied to food security could generate unintended consequences for both inflation and farm incomes.

A gradual transition toward more targeted and efficient subsidy delivery may therefore be preferable to sudden price liberalisation.

Emerging digital infrastructure — including PM-KISAN databases, AgriStack architecture, digitised land records, and direct-benefit-transfer systems — creates new possibilities for improving targeting while preserving farmer support.

Similarly, bringing greater balance between nitrogen, phosphorus, and potassium incentives can be pursued incrementally alongside investments in extension systems, farmer awareness, and region-specific nutrient recommendations. International experience suggests that behavioural change in nutrient application requires institutional support, not only price signals.

Importantly, fertiliser reform should not be framed as subsidy withdrawal. Indian agriculture still supports millions of small and marginal farmers operating under high climatic and income uncertainty.

The policy objective should instead be improving the quality, sustainability, and long-term productivity impact of public expenditure.

To enter the next stage of its agricultural transformation in India, fertiliser policy should ultimately be viewed as a successful system entering a new phase of evolution. The earlier phase focused on achieving food security through rapid productivity expansion. The emerging phase is likely to focus on nutritional security, sustainability, efficient resource use, climate resilience, and strategic supply-chain security.

The institutional foundations for this transition already exist: soil-health initiatives, digital agriculture platforms, direct-benefit-transfer systems, domestic capacity expansion, and increasing emphasis on precision farming.

The challenge now is to integrate these initiatives into a more coordinated fertiliser strategy suited to the needs of twenty-first century Indian agriculture.

India’s agricultural transformation was built on bold policy innovation in the past. The next generation of fertiliser reforms offers an opportunity to build on that legacy by making the system more efficient, regionally responsive, environmentally sustainable, fiscally prudent, and future-ready.

(Dr Apica Sharma is an Economist at NITI Aayog, working on macroeconomic and public policy issues. This is an opinion piece and the views expressed are the author's own. The Quint does not endorse or is responsible for them.)