UPSC Prelims Practice Questions — Fertiliser subsidy bill for FY27 may rise by ₹70,000 crore
Q1. With reference to the Nutrient Based Subsidy (NBS) scheme, consider the following:
1. It was introduced on 1 April 2010 for phosphatic and potassic (P&K) fertilisers.
2. Under it, a fixed subsidy is provided on P&K fertilisers based on their nutrient content, revised annually or bi-annually.
3. The maximum retail price (MRP) of P&K fertilisers under the scheme is statutorily fixed by the Government.
4. Di-ammonium phosphate (DAP) is one of the fertilisers covered under the scheme.
Which of the above is/are correctly identified?
- It was introduced on 1 April 2010 for phosphatic and potassic (P&K) fertilisers.
- Under it, a fixed subsidy is provided on P&K fertilisers based on their nutrient content, revised annually or bi-annually.
- The maximum retail price (MRP) of P&K fertilisers under the scheme is statutorily fixed by the Government.
- Di-ammonium phosphate (DAP) is one of the fertilisers covered under the scheme.
- A. 1 and 3
- B. 2 and 4
- C. 1, 2 and 4
- D. 1, 3 and 4
Q2. The Nutrient Based Subsidy (NBS) scheme for P&K fertilisers is implemented exclusively under which one of the following?
- A. Department of Fertilisers, Ministry of Chemicals and Fertilizers
- B. Department of Agriculture and Farmers Welfare, Ministry of Agriculture
- C. Department of Food and Public Distribution, Ministry of Consumer Affairs
- D. Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers
Q3. With reference to the distinction between urea subsidy and the Nutrient Based Subsidy (NBS), consider the following:
1. Urea is provided to farmers at a statutorily notified Maximum Retail Price.
2. The MRP of urea has remained unchanged at ₹242 per 45-kg bag since March 2018.
3. Unlike decontrolled urea, phosphatic and potassic fertilisers under NBS have a statutorily controlled MRP.
4. Urea subsidy equals the difference between the delivered farm-gate cost of urea and the net market realisation by urea units.
Which of the above is/are NOT correct?
- Urea is provided to farmers at a statutorily notified Maximum Retail Price.
- The MRP of urea has remained unchanged at ₹242 per 45-kg bag since March 2018.
- Unlike decontrolled urea, phosphatic and potassic fertilisers under NBS have a statutorily controlled MRP.
- Urea subsidy equals the difference between the delivered farm-gate cost of urea and the net market realisation by urea units.
- A. 1 only
- B. 3 only
- C. 2 and 4
- D. 3 and 4
Q4. In the context of India's fertiliser subsidy framework, which one of the following best describes the 'Nutrient Based Subsidy (NBS)'?
- A. A fixed subsidy on P&K fertilisers based on their nutrient content, with a market-determined MRP
- B. A subsidy fixing a uniform per-bag MRP for all fertilisers irrespective of their nutrient content
- C. A subsidy transferred directly into farmers' bank accounts based on the size of their landholding
- D. A subsidy on urea calculated as the gap between its cost of production and the notified MRP
Q5. With reference to the fertiliser subsidy outlook for FY27 (2026-27), consider the following:
1. The subsidy was budgeted at about ₹1.71 lakh crore for FY27.
2. The bill may rise by about ₹70,000 crore to nearly ₹2.41 lakh crore.
3. The projected rise has been linked mainly to a fall in international fertiliser prices.
4. In FY25, about 73% of India's urea imports came from West Asia.
Which of the above is/are correctly identified?
- The subsidy was budgeted at about ₹1.71 lakh crore for FY27.
- The bill may rise by about ₹70,000 crore to nearly ₹2.41 lakh crore.
- The projected rise has been linked mainly to a fall in international fertiliser prices.
- In FY25, about 73% of India's urea imports came from West Asia.
- A. 1 and 3
- B. 2 and 4
- C. 1, 2 and 4
- D. 1, 3 and 4
Q6. In the Union Budget, the fertiliser subsidy — including the projected FY27 overrun — is classified as which one of the following?
- A. Revenue expenditure
- B. Capital expenditure
- C. Grants-in-aid for creation of capital assets
- D. Non-debt capital receipt
Q7. With reference to the administration of India's fertiliser subsidies, consider the following statements:
1. The fertiliser subsidy is administered by the Department of Fertilisers, and not by the Department of Agriculture and Farmers Welfare.
2. Both the urea subsidy and the Nutrient Based Subsidy are administered by the Department of Fertilisers.
3. Unlike the NBS for P&K fertilisers, the urea subsidy is administered by the Department of Chemicals and Petrochemicals.
Which of the statements given above is/are correct?
- The fertiliser subsidy is administered by the Department of Fertilisers, and not by the Department of Agriculture and Farmers Welfare.
- Both the urea subsidy and the Nutrient Based Subsidy are administered by the Department of Fertilisers.
- Unlike the NBS for P&K fertilisers, the urea subsidy is administered by the Department of Chemicals and Petrochemicals.
- A. 1 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q8. The one-time Special Package on Di-Ammonium Phosphate (DAP), granted at ₹3,500 per MT over and above the NBS rates owing to the geopolitical situation, was approved by which one of the following?
- A. The Union Cabinet
- B. The Department of Fertilisers on its own authority
- C. NITI Aayog
- D. The Fertiliser Association of India
Q9. The one-time special package of ₹3,500 per MT approved over and above the Nutrient Based Subsidy rates was meant specifically for which one fertiliser?
- A. Di-ammonium phosphate (DAP)
- B. Muriate of potash (MOP)
- C. Urea
- D. Single super phosphate (SSP)
Q10. The Nutrient Based Subsidy rates approved for Kharif 2025 covered how many grades of phosphatic and potassic (P&K) fertilisers?
Q11. Fertilisers are regulated as an essential commodity in India under which one of the following?
- A. The Essential Commodities Act, 1955
- B. The Insecticides Act, 1968
- C. The Food Safety and Standards Act, 2006
- D. The Seeds Act, 1966