Critically evaluate the Nutrient Based Subsidy regime as a way to protect farmers from global commodity price shocks.

The Nutrient Based Subsidy (NBS) has been in force since 2010. It pays a fixed subsidy for each kg of nutrient in phosphatic and potassic (P&K) fertilisers [2]. It now faces a stress test: sulphur, a key input for phosphatic fertilisers, rose from $280/tonne (July 2025) to $1,050/tonne (July 2026) [1]. NBS has cushioned farmers, but the fiscal and soil-health costs are rising.

Strengths: how NBS shields farmers

• Periodic resetting: rates take into account the international prices of fertilisers and raw materials, and are revised once or twice a year [3]. Kharif 2026 needed about ₹41,534 crore, around ₹4,317 crore more than Kharif 2025 [5].
• Flexible top-ups: the Centre has paid special DAP packages above NBS rates, e.g. ₹3,500/tonne in 2024-25 during geopolitical disruption [4].
• Supply-side backing: long-term contracts and diversified sourcing kept availability largely adequate despite West Asian disruption to ammonia, phosphoric acid and sulphur imports [6].
• Nutrient logic: the subsidy is paid on nutrient content, which rewards fortified and complex grades over single-nutrient use [2].

Weaknesses: where the shield cracks

• Time lag: rates are fixed for a season. A mid-season spike, like the surge after the March 2026 strikes on Iran [1], hits importers first, and stocks can run thin.
• Market pricing only on paper: repeated special packages [4] mean retail prices are still managed. The shock moves to the exchequer instead of being shared.
• Urea outside NBS: urea sells at a statutory MRP of ₹242 per 45-kg bag, whatever its cost [8]. When only P&K costs rise, farmers use even more nitrogen. CACP (2025) linked the higher urea subsidy to excess nitrogen use, against the ideal 4:2:1 NPK ratio [7].
• Import dependence untouched: India imports about 90% of its rock phosphate [6], and about 90% of its sulphur imports come from West Asia [1]. A subsidy deals with the price, not with where the risk comes from.

On balance, NBS protects the farmer's price but not the wider system, because the fiscal, soil and supply risks remain. Three steps would make it a true shock absorber that advances food security under SDG 2:

• Index rates to raw-material prices.
• Phase urea into a nutrient-based framework, to correct the imbalance CACP flagged [7].
• Deepen long-term deals with Jordan, Morocco and other suppliers outside the Gulf [6].