UPSC Prelims Practice Questions — India raises fertilizer subsidy by 64%, overshoots Budget estimates
Q1. With reference to the Nutrient Based Subsidy (NBS) scheme for fertilizers in India, consider the following statements: Which of the statements given above is/are correct?
- The subsidy is fixed in rupees per kilogram of nutrients such as nitrogen, phosphate, potash and sulphur, and not as a single amount per product.
- The government notifies the maximum retail price of each subsidised grade of P&K fertilizer.
- Urea is subsidised under a separate regime and is not covered by the NBS scheme.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q2. Suppose the international prices of both urea inputs and DAP rise sharply in the middle of a season. The government does not change the retail price of urea or the per-nutrient subsidy rates under the Nutrient Based Subsidy scheme. Which of the following best describes the immediate effect?
- A. The urea subsidy bill rises, while the higher DAP cost falls on its retail price or on company margins
- B. Neither subsidy bill changes, since both subsidies are fixed in rupees per kilogram of nutrient
- C. Both subsidy bills rise automatically, since both subsidies are computed as cost minus retail price
- D. The DAP subsidy bill rises, while the higher urea cost falls on its retail price or on company margins
Q3. Consider the following statements: Which of the following is correct in respect of the above statements?
- Fertilizer use in India tends to be skewed towards nitrogen relative to phosphorus and potassium, which works against balanced use of nutrients.
- The maximum retail price of urea is statutorily fixed by the government, whereas the prices of P&K fertilizers are left to market dynamics.
- A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
- C. Statement-I is correct, but Statement-II is incorrect
- D. Statement-I is incorrect, but Statement-II is correct
Q4. Consider the following statements: Which of the following is correct in respect of the above statements?
- A sustained rise in international LNG prices increases the Centre's subsidy outgo even on urea manufactured within India.
- Domestically manufactured urea is sold at a market-determined price that passes higher input costs on to farmers.
- A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
- C. Statement-I is correct, but Statement-II is incorrect
- D. Statement-I is incorrect, but Statement-II is correct
Q5. The Union Government's fertilizer subsidy for 2026-27 may reach about ₹3 lakh crore, against a Budget Estimate of ₹1.71 lakh crore. In this context, consider the following statements: Which of the statements given above is/are correct?
- Since fertilizer subsidy is capital expenditure, the overshoot would widen the fiscal deficit but leave the revenue deficit unaffected.
- Since fertilizer subsidy is expenditure charged on the Consolidated Fund of India, the extra amount can be spent without any further vote of the Lok Sabha.
- Expenditure beyond the amount authorised by Parliament has to be authorised through supplementary or excess grants under Article 115 of the Constitution.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 only
- D. 3 only
Q6. Consider the following assertion: Keeping urea outside the nutrient-based subsidy regime works against the goal of balanced use of fertilizer nutrients. Which of the following statements support/supports the above assertion?
- The maximum retail price of urea is statutorily fixed, so its farm-gate price does not rise when its cost of production rises.
- The retail prices of P&K fertilizers are left to market dynamics and so tend to move with the cost of imported inputs.
- Fertilizer subsidy is released to companies on the basis of actual sales to buyers recorded through PoS devices at retail shops.
- A. 1 and 3 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q7. With reference to Direct Benefit Transfer (DBT) in fertilizer subsidy in India, consider the following statements: Which of the statements given above is/are correct?
- The subsidy is credited to the farmer's bank account after the farmer buys fertilizer at the full unsubsidised price.
- The subsidy is released to fertilizer companies on the basis of actual sales to farmers or buyers.
- Sales to buyers are captured through Point of Sale (PoS) devices installed at retail shops.
- A. 1 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q8. Consider the following features of fertilizer subsidy regimes in India: Which of the above features apply to urea?
- Its maximum retail price is statutorily fixed by the government.
- It receives a fixed subsidy in rupees per kilogram of nutrient, announced in advance.
- Its manufacturers are allowed to fix its retail price as per market dynamics.
- Its subsidy outgo rises when its cost goes up while its retail price stays unchanged.
- A. 2 and 3 only
- B. 2 and 4 only
- C. 1 and 4 only
- D. 1, 3 and 4 only