The Government of India continues its robust implementation of the Direct Benefit Transfer (DBT) mechanism in the fertilizer subsidy system as of 2025. This initiative ensures that subsidies reach the intended beneficiaries—farmers—efficiently and transparently. Rather than transferring money directly to farmers’ accounts, the government routes the subsidy to fertiliser companies based on actual Aadhaar-authenticated sales at retail outlets. This model guarantees equitable access to subsidised fertilisers for all farmers across the nation.
How DBT Works in Fertilizers
Under the Direct Benefit Transfer (DBT) framework, fertiliser companies are reimbursed 100% of the subsidy after the sale is completed and verified through Point of Sale (PoS) devices. These devices are Aadhaar-enabled and used at authorised fertiliser outlets to authenticate farmer identity at the time of purchase. By ensuring the subsidy is linked to genuine sales, DBT reduces the scope for diversion, enforces transparency, and maintains a no-denial policy, where any Aadhaar-verified farmer can access subsidised fertilisers without restrictions.
Financial Overview of Subsidy Distribution (2022–2025)
Between the financial years 2022-23 to 2025-26 (up to July 21, 2025), the central government disbursed an estimated ₹6,76,679 crore under the fertiliser subsidy programme. This amount covers both indigenous and imported Urea, as well as Phosphatic & Potassic (P&K) fertilisers.
Breakdown:
- Indigenous Urea received the largest share
- Followed by Imported Urea
- Then P&K fertilisers
Notably, the subsidy expenditure declined from ₹2,54,799 crore in 2022-23 to ₹49,330 crore by July 2025, suggesting shifts in policy strategy, market trends, or improved efficiency under the DBT regime.
Urea Pricing and Subsidy Compensation
The price of Urea for farmers remains under statutory control. As of 2025, a 45 kg bag of urea is sold at ₹242, excluding neem coating and applicable taxes. Regardless of actual market prices, farmers continue to pay this uniform rate. The government bridges the gap by compensating fertiliser manufacturers for the difference between the actual delivery cost and the fixed MRP, ensuring affordability and price stability.
Nutrient Based Subsidy (NBS) for P&K Fertilisers
Implemented since April 2010, the Nutrient Based Subsidy (NBS) scheme governs the pricing of Phosphatic and Potassic fertilisers. Under this model:
- Subsidies are announced annually, based on the nutrient composition.
- Manufacturers are free to set MRPs in alignment with market forces, under government monitoring.
This system provides a balanced approach, where farmers benefit from subsidised inputs while companies retain some flexibility in pricing.
Enabling Technology: Aadhaar and PoS Integration
A cornerstone of the DBT in fertilizers is Aadhaar-based authentication at the point of sale. Retailers use PoS devices to:
- Verify the buyer’s Aadhaar credentials
- Record real-time transactions
- Ensure that only genuine beneficiaries receive the subsidy
This digital integration minimizes fraud, curtails ghost beneficiaries, and aligns with the inclusive no-denial policy—a foundational principle of the DBT approach.
