India stands at a turning level in its agricultural journey. Its fertilizer subsidy programme, a cornerstone of its food-security technique, now threatens the sustainability it goals to make sure1. The programme wants reform.
Within the present system, the federal government pays subsidies to fertilizer producers in order that they don’t have to cost as a lot for his or her merchandise. Because of this farmers are sometimes unaware of the true price of urea and different chemical fertilizers, so are likely to overuse the merchandise (see ‘India’s rising fertilizer use’). That is leading to extreme soil degradation, water air pollution and elevated greenhouse-gas emissions2,3. For instance, in 2017, overuse of nitrogen-based fertilizers added 57% to the nation’s agricultural greenhouse-gas emissions4.
The overuse can also be straining the nationwide purse5. For the 2024 fiscal yr, India has allotted one-ninth of its complete agricultural funds to fertilizer subsidies, nearly US$20 billion (1.6 trillion rupees). But round $715 million of that spend might be misplaced: a whole lot of India’s backed urea is diverted to non-agricultural makes use of (plywood manufacturing and textile processing) or smuggled to neighbouring nations.
Sources: Subsidies: Govt of India/Ref. 5. Functions: FAOSTAT (https://go.nature.com/3NOVNGS)
Compounding these points, some 70% of Indian farmers apply fertilizers with out first testing the soil correctly or adhering to nutrient-management suggestions. That is degrading the well being of the soil, which may have long-term results on soil fertility and agricultural productiveness6. Extreme fertilizer use within the Indo-Gangetic plains, as an example, has led to soil acidification and lowered crop yields7.
Moreover, the present system discourages innovation within the fertilizer business. Producers have little incentive to enhance the effectivity of their manufacturing processes or develop extra environmentally pleasant merchandise.
All these issues are broadly acknowledged. In 2018, India took a step in direction of addressing leakages by recording gross sales of backed fertilizers to farmers via point-of-sale units. Though this has lowered losses, it hasn’t addressed the underlying points — lack of farmer consciousness round soil well being, injudicious fertilizer use and low environmental sustainability.
After consultations with a number of authorities representatives and researchers in India, right here I suggest a solution to overhaul the present mannequin for fertilizer subsidies. Transferring subsidies on to farmers’ financial institution accounts and linking them to soil-health programmes would empower farmers to make more-informed selections. Realizing the true prices, they need to use much less fertilizer. This might scale back fertilizer run-off into water our bodies by hundreds of thousands of tonnes and save the federal government billions of {dollars}.
A path to sustainability
A sequence of changes would make India’s agricultural system extra sustainable (see Determine S1 in Supplementary data). These construct on India’s current digital infrastructure, together with the ‘Aadhaar’ identification system and the Pradhan Mantri Jan-Dhan Yojana monetary inclusion programme. Aadhaar is a 12-digit distinctive id quantity issued to all Indian residents and primarily based on their biometric and demographic knowledge. The Pradhan Mantri Jan-Dhan Yojana goals to make sure that each family in India has entry to financial institution accounts and different monetary providers.
Direct switch of subsidies to farmers’ financial institution accounts. If farmers have management over the subsidy funds, they’d be incentivized to optimize their fertilizer use as a result of they’d expertise the monetary impression of their selections instantly. In the event that they use much less fertilizer than anticipated, they will maintain any remaining subsidy for different agricultural inputs or private use.
India funds: Modi bets large on nuclear power and area
Funds can be scaled on the premise of landholding dimension, crop kind and native soil circumstances, making certain that farmers obtain subsidies just for the quantity of fertilizer they would want in the event that they farmed sustainably. For instance, a farmer with a two-hectare plot rising rice in a area with nitrogen-deficient soil would possibly obtain a better subsidy than would a farmer with the identical dimension plot rising lentils in an space with naturally nitrogen-rich soil.
One research8 means that optimizing nitrogen use in Indian agriculture may scale back nitrous oxide emissions by at the very least 30%. This discount, mixed with the potential for elevated carbon sequestration in more healthy soils, may make a considerable contribution to India’s commitments underneath the Paris local weather settlement.
Direct transfers would additionally scale back leakages within the subsidy system by as much as 40%, in response to pilot research9. This might doubtlessly save the federal government billions of {dollars} yearly, which may then be reinvested in farmers or within the betterment of farmers via agricultural analysis and rural improvement. And by ensuring that every one farmers have financial institution accounts, the system may speed up monetary inclusion in rural areas, opening up alternatives for credit score entry and digital monetary providers.
Market-driven pricing of fertilizers. A dynamic pricing mechanism, with a subsidy that’s adjusted in response to market costs, environmental circumstances and crop-specific wants, would make sure that the subsidy stays efficient whereas selling sustainable practices. As an illustration, in periods of excessive market costs, the subsidy may very well be elevated to take care of affordability for farmers. Conversely, in areas experiencing good rainfall and soil circumstances, the speed is likely to be lowered, as a result of much less fertilizer can be wanted.
Improved soil-management practices would assist to make sure sustainable manufacturing of espresso berries in India.Credit score: Abhishek Chinnappa/Getty
As an example: if the market worth of urea rises from 5,000 to six,000 rupees per tonne, the federal government may enhance the subsidy from 90% to 95% of the worth to maintain the farmer’s prices comparatively steady. Equally, in a drought-prone space throughout an excellent monsoon yr, the subsidy is likely to be lowered from 50% to 40%, encouraging farmers to rely extra on pure soil fertility.
This mechanism would additionally encourage fertilizer corporations to develop extra environment friendly and environmentally pleasant merchandise, doubtlessly positioning India as a world chief in sustainable agricultural inputs. Though there is likely to be preliminary price will increase as corporations put money into analysis and improvement, the long-term advantages of more-efficient fertilizer use may result in total price reductions for farmers.
Integration of subsidies with soil well being knowledge. Subsidy funds may very well be linked to a scheme referred to as the Soil Well being Card. Run by the Division of Agriculture and Farmers Welfare, this scheme gives farmers with detailed details about their soil’s nutrient standing and recommends applicable doses of fertilizers. It presently covers all 150 million farm holdings in India.
Genetic modification can enhance crop yields — however cease overselling it
When a farmer applies for a subsidy, the system would routinely verify their Soil Well being Card knowledge. By combining these knowledge with details about the farmer’s crop plans and native local weather circumstances, the system would calculate the optimum fertilizer requirement. The subsidy quantity would then be tailor-made to this requirement, successfully discouraging overuse.
Information on fertilizer-use patterns is also used to tell insurance policies as a result of they’d be obtained via the point-of-sale units used for fertilizer purchases and linked to the farmer’s Aadhaar identification quantity. The digital infrastructure required would allow extra focused agricultural insurance policies and analysis initiatives, catalysing a broader shift in direction of precision agriculture in India.
A digital platform for managing subsidies and advising farmers. This platform would function a one-stop resolution for farmers, integrating subsidy administration, soil well being data and agricultural advisory providers. It might be accessed via smartphones or via area people service centres. It might embody a subsidy calculator that would present farmers the cash they’d obtain on the premise of their land, crops and soil well being knowledge, in addition to real-time market costs for fertilizers and different agricultural inputs. It may additionally present personalised crop and fertilizer suggestions in response to the present soil well being and native climate circumstances. Academic sources on sustainable farming practices may very well be shared. A assist desk for technical help and grievance redressal ought to be included.
I suggest integrating this platform with authorities initiatives resembling crop insurance coverage (Pradhan Mantri Fasal Bima Yojana) and minimal help worth schemes that assure funds to farmers for sure crops (referred to as PM-KISAN), making a holistic help system for farmers.
Incentives for adopting sustainable farming practices. The digital platform may incorporate ideas of behavioural economics, utilizing ‘nudges’ to assist farmers to make sustainable decisions. For instance, farmers who go for natural fertilizers or practise crop rotation would possibly obtain further subsidy factors or precedence in different authorities schemes. Recognition and awards is likely to be given for ‘mannequin farmers’ who exhibit greatest practices.
These incentives can be personalized for various agro-climatic zones. As an illustration, in water-stressed areas, there is likely to be further incentives for adopting water-efficient farming strategies together with optimum fertilizer use.
Addressing challenges
The proposed mannequin provides a path in direction of sustainable intensification of agriculture, aligning with India’s commitments underneath the Paris settlement and to the United Nations Sustainable Improvement Targets. Nonetheless, there are challenges to its implementation, requiring a complete method.
One hurdle is the shortage of full and strong land-ownership information, which has impeded different focused subsidy schemes in India. To sort out this, I advocate for a phased implementation, beginning with areas which have extra dependable information (resembling Punjab state) and accelerating land-record digitization.
A parched paddy discipline close to Ahmedabad, India.Credit score: Amit Dave/Reuters
In the long term, satellite tv for pc imagery may very well be used to confirm land use and crop patterns, whereas blockchain know-how may guarantee safe and clear record-keeping of land possession and subsidy disbursements. Monitoring different crop enter purchases or gross sales of merchandise would verify eligibility, too.
Farmer adaptation is essential, and I suggest intensive consciousness campaigns, hands-on coaching and a user-friendly cellular app with voice-based directions in native languages. To incorporate tenant farmers, I suggest a registration system with provisions for tenancy agreements, verified by native authorities our bodies.
One other problem is the readiness of the nation’s infrastructure, notably in rural areas, which have restricted Web connectivity and banking providers. To mitigate this, I counsel collaborating with telecommunications corporations via public–personal partnerships, establishing cellular banking items and digital service centres in distant areas, and creating offline modes of subsidy disbursement with periodic synchronization. Recognizing the digital literacy hole, I suggest a community of native help centres to help farmers with registration, subsidy claims and troubleshooting.
M. S. Swaminathan (1925–2023), chief of India’s ‘inexperienced revolution’
Information privateness and safety considerations may be addressed via strong safety measures, together with end-to-end encryption and strict entry controls, together with clear, clear data-use insurance policies. To forestall misuse, biometric verification, periodic audits and machine-learning algorithms can detect fraudulent exercise.
Monetary literacy and inclusion challenges may be tackled via training programmes, partnerships with native monetary establishments and accelerated efforts to open financial institution accounts for farmers who don’t have already got them.
To make sure well timed disbursement, I suggest streamlining the subsidy calculation and disbursement course of. This might contain automating the calculation of subsidy quantities in response to real-time knowledge inputs, together with soil well being, crop kind and market costs. The disbursement course of may very well be expedited through the use of blockchain know-how to make sure clear and practically instantaneous transfers. For instance, sensible contracts on a blockchain community may routinely set off subsidy funds when particular circumstances (resembling verified fertilizer purchases) are met.
Advance subsidy credit is also supplied. As with a pre-approved credit score line, farmers may very well be allotted a certain quantity of subsidy upfront in response to their historic use patterns and present cropping plans. They might draw on this credit score as wanted, with the ultimate subsidy quantity being reconciled on the finish of the season on the premise of precise use.
Biases in ‘sustainable finance’ metrics may hinder lending to those who want it most
To handle market volatility considerations in a deregulated fertilizer market, I like to recommend implementing worth monitoring mechanisms, contemplating utilizing worth ceilings through the transition and inspiring long-term contracts between farmer cooperatives and producers.
To sort out potential business resistance, I counsel a gradual transition interval and efforts to focus on the incentives for corporations to innovate, together with advantages resembling real-time transactions and improved provide chains that would overcome present lengthy wait instances for funds.
To allay food-security considerations and guarantee long-term success, I suggest cautious monitoring of agricultural output through the transition, with provisions to regulate the mannequin if mandatory. That ought to be supported by a complete monitoring and analysis framework that makes use of remote-sensing applied sciences, soil well being playing cards and crop-yield knowledge.
This multi-faceted method goals to handle the complicated challenges related to remodeling India’s fertilizer subsidy programme, paving the way in which for a extra sustainable and environment friendly agricultural sector.
The trail forwards
To implement this transformative mannequin, a sequence of coordinated actions throughout authorities our bodies and establishments are wanted. The Ministry of Agriculture and Farmers’ Welfare can spearhead a pilot programme in chosen districts, chosen to characterize various agro-climatic zones and land possession patterns. This pilot ought to span at the very least two agricultural seasons, to seize seasonal differences and allow iterative enhancements.
In Asia, different proteins are the brand new clear power
Concurrently, the Ministry of Electronics and Data Know-how should fast-track the event of a strong digital platform for subsidy disbursement, seamlessly integrating it into PM-KISAN and different current schemes (as occurred with PM-KISAN, which gives revenue help to small and marginal farmers, and the Soil Well being Card). The Division of Fertilizers ought to interact in collaborative dialogue with business stakeholders to chart a roadmap for transitioning to a market-driven pricing mannequin, incorporating incentives for the event of revolutionary, sustainable fertilizer merchandise.
State governments, with help from the central authorities, have to speed up efforts to digitize land information. Agricultural universities and analysis establishments ought to be tasked with conducting intensive research on this method’s impression on soil well being, crop yields and farmer incomes, offering essential data-driven insights to assist refine the insurance policies.
The Ministry of Finance should allocate funds to farmer-education programmes. And, for oversight, a job power ought to be established to handle implementation efforts throughout authorities departments.
This coherent multi-pronged method, involving key stakeholders at varied ranges, is important for the profitable transformation of India’s fertilizer subsidy programme. The trail to implementing such a mannequin will undoubtedly be complicated, requiring cautious planning and huge engagement. Nonetheless, the potential rewards — when it comes to improved environmental sustainability, financial effectivity and farmer welfare — make it not simply fascinating, however mandatory.
