Fertiliser Subsidy in India: Issues for Reforms

In India, the budgetary subsidy has increased enormously over time. The present paper attempts to make an assessment of the trend, composition and reasons of increase in fertiliser subsidy. The study observes that the fertilizer subsidies had grown at a sharper rate upto 2008 which has declined subsequently in a relative sense. However, it is still phenomenal and a major part of explicit subsidies in India. The paper argues for a National Policy on Targeting Subsidies. Based on the outcome of the study, certain policy recommendations are made for fiscal discipline by rationalizing subsidies, and target subsidies only to the financially weaker section of the economy, which should be delivered directly to their bank accounts under Direct Benefit Scheme (DBS).