UPSC Prelims Practice Questions — W. Asia crisis may push FY27 fertiliser subsidy over ₹3 lakh crore

Q1. With reference to the difference between the Nutrient Based Subsidy (NBS) regime and the pricing of urea in India, consider the following statements. Which of the statements given above is/are correct?

  1. The Nutrient Based Subsidy (NBS) scheme for phosphatic and potassic fertilizers came into effect from 1 April 2010.
  2. Under the NBS regime the P&K sector is decontrolled, with companies fixing the MRP, whereas urea continues to be sold at a statutorily notified MRP.
  3. The subsidised MRP of a 45 kg bag of urea has remained unchanged since March 2015.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. Which one of the following administers both the Nutrient Based Subsidy scheme for P&K fertilizers and the statutory pricing of urea in India?

  • A. Department of Fertilizers, Ministry of Chemicals and Fertilizers
  • B. Department of Agriculture and Farmers Welfare, Ministry of Agriculture and Farmers Welfare
  • C. Department of Food and Public Distribution, Ministry of Consumer Affairs
  • D. Department of Rural Development, Ministry of Rural Development

Q3. With reference to the retail price of urea and its actual cost of production in India, consider the following statements. Which of the statements given above is/are correct?

  1. The subsidised MRP of a 45 kg bag of urea is Rs.242, exclusive of neem-coating charges and applicable taxes.
  2. The actual cost of a bag of urea is around Rs.2,200, and the difference between this and the MRP is paid as subsidy to the manufacturer or importer.
  3. Urea is priced under the Nutrient Based Subsidy regime in the same manner as phosphatic and potassic fertilizers.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q4. With reference to urea pricing and subsidy in India, which of the following statements are correctly identified?

  1. Urea is provided to farmers at a statutorily notified MRP irrespective of its cost of production.
  2. The urea subsidy equals the difference between the delivered farm-gate cost and the net market realization by urea units.
  3. The MRP of a 45 kg bag of urea has been fixed at Rs.242 since March 2018.
  4. The Rs.242 MRP of a urea bag is inclusive of neem-coating charges and applicable taxes.
  • A. 1 and 3
  • B. 2 and 4
  • C. 1, 2 and 3
  • D. 3 only

Q5. If the West Asia crisis persists, to approximately what figure could India's FY27 fertiliser subsidy rise, against a Budget Estimate of Rs.1.71 lakh crore?

  • A. About Rs.2.1 lakh crore
  • B. About Rs.2.6 lakh crore
  • C. About Rs.3.4 lakh crore
  • D. About Rs.4.5 lakh crore

Q6. With reference to the FY27 fertiliser subsidy and the impact of the West Asia crisis, consider the following statements. Which of the statements given above is/are correct?

  1. The FY27 Budget Estimate for fertiliser subsidy (Department of Fertilizers) is about Rs.1.71 lakh crore.
  2. If the West Asia crisis persists, the FY27 subsidy could nearly double to around Rs.3.4 lakh crore.
  3. The projected overshoot is attributed mainly to a decline in domestic natural gas output rather than to rising landed urea and LNG prices.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q7. With reference to the geography and significance of the Strait of Hormuz, consider the following statements. Which of the statements given above is/are correct?

  1. The Strait of Hormuz links the Persian Gulf with the Gulf of Oman and the Arabian Sea.
  2. Iran controls the strait to the north of the shipping lanes and Oman to the south.
  3. More than 40 per cent of global oil and LNG exports pass through the Strait of Hormuz.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q8. Which one of the following bodies approves the Nutrient Based Subsidy rates fixed for each Kharif and Rabi season in India?

  • A. The Union Cabinet, on a proposal moved by the Department of Fertilizers
  • B. NITI Aayog, on the recommendation of the Ministry of Agriculture
  • C. The Fertilizer Association of India, in consultation with manufacturers
  • D. The Commission for Agricultural Costs and Prices (CACP)

Q9. With reference to India's fertiliser and feedstock import dependence, consider the following statements. Which of the statements given above is/are NOT correct?

  1. India imports roughly 60 per cent of its DAP requirement.
  2. DAP imports are sourced from countries such as China and Saudi Arabia.
  3. India imports around 30 per cent of its annual urea from the West Asia region.
  4. India meets its entire urea requirement through imports, with no significant domestic production.
  • A. 1 and 2
  • B. 2 and 4
  • C. 1, 2 and 4
  • D. 4 only

Q10. The '3Fs' framing used by Finance Minister Nirmala Sitharaman in the context of macro-stability and subsidy management refers to which one of the following?

  • A. Food, fuel and fertiliser
  • B. Fuel, fertiliser and forex
  • C. Farm, food and forex
  • D. Fuel, food and finance

Q11. Under the 'DBT in Fertilizers' system in India, the 100 per cent subsidy on fertilizer grades is released to fertilizer companies through which one of the following mechanisms?

  • A. Aadhaar-authenticated sale on PoS devices at each retail shop, based on actual sales to beneficiaries
  • B. Direct cash transfer of the subsidy amount into each farmer's bank account
  • C. Adjustment of the subsidy against the farmer's Kisan Credit Card limit
  • D. Issue of e-vouchers redeemable at Primary Agricultural Credit Societies