How does the government balance the need for fertilizer subsidies with the goal of fiscal discipline?

Fertilizer subsidies are crucial for supporting Indian farmers and ensuring food security by making fertilizers affordable. However, these subsidies place a significant burden on the government’s finances, challenging fiscal discipline and budget management. The government must carefully balance the need to assist farmers with the goal of maintaining a healthy fiscal situation.

• Targeted Subsidies: The government is working to direct subsidies more accurately to genuine and needy farmers, using schemes like Direct Benefit Transfer (DBT) in fertilizers, to reduce leakages and wastage.
• Budgetary Allocations: Fertilizer subsidies are planned as a part of the Union Budget. The government tries to estimate the required subsidy amount and adjust other expenditures to avoid excessive fiscal deficit.
• Reforms and Efficiency: Efforts are made to promote balanced use of fertilizers and encourage alternatives like organic farming, which can reduce the overall subsidy burden.
• Price Controls: The government negotiates with fertilizer manufacturers and controls the Maximum Retail Price (MRP) to keep fertilizers affordable, while compensating companies through subsidies.
• Monitoring and Audits: Regular monitoring and audits are conducted to check misuse and ensure that subsidies reach the intended beneficiaries efficiently.
• Phased Reduction: Gradual reduction or rationalization of subsidies is sometimes considered, with parallel support for farmers in other forms like income support or crop insurance.