UPSC Prelims Practice Questions — Cabinet approves Nutrient Based Subsidy (NBS) rates for Rabi 2026-27 (from 01.10.2026 to 31.03.2027) on Phosphatic and Potassic (P&K) fertilizers

Q1. With reference to the pricing of chemical fertilizers in India, consider the following statements: Which of the statements given above is/are correct?

1. Under the Nutrient Based Subsidy scheme, a rise in international DAP prices during a season is automatically absorbed, because the per-nutrient subsidy rate is revised within the season to keep the retail price constant.
2. Under the Nutrient Based Subsidy scheme, the Government fixes the subsidy per kilogram of nutrient, while the retail price of the fertilizer is fixed by the company at a reasonable level.
3. For urea, since the retail price is fixed by the Government, a rise in the cost of imported urea falls mainly on the subsidy bill rather than on the farmer.

• A. 2 and 3 only
• B. 3 only
• C. 1, 2 and 3
• D. 1 and 2 only

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

1. In the Cabinet's Rabi 2026-27 decision on Nutrient Based Subsidy rates, urea figures only as an international input-price trend and not as a fertilizer receiving a nutrient-based rate.
2. The Nutrient Based Subsidy scheme provides no subsidy for the nitrogen content of fertilizers, which is why urea, a nitrogenous fertilizer, lies outside it.

• 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

Q3. With reference to how subsidy is delivered under the Nutrient Based Subsidy scheme, consider the following statements: Which of the statements given above is/are correct?

1. The subsidy is released to fertilizer manufacturers and importers at notified rates instead of being credited to farmers.
2. The farmer's benefit depends on companies passing the subsidy on through the retail price they set.
3. Other nutrients being equal, a tonne of a grade with a higher nitrogen and phosphate content attracts more subsidy than a tonne of a grade with less of those nutrients.

• A. 1 and 3 only
• B. 1, 2 and 3
• C. 1 and 2 only
• D. 2 and 3 only

Q4. Suppose international prices of DAP and MOP rise sharply, the per-nutrient subsidy rates for P&K fertilizers are left unchanged, and the retail price of urea stays at its statutorily fixed level. Which one of the following is the most likely effect on the pattern of fertilizer use by farmers?

• A. Nitrogen use falls relative to potash as urea prices follow the rise in global prices
• B. Use of nitrogen, phosphate and potash falls in equal proportion, leaving their ratio unchanged
• C. Phosphate and potash use rise relative to nitrogen as farmers move away from urea
• D. Nitrogen use rises relative to phosphate and potash as farmers shift towards urea

Q5. Consider the following facts: the agronomic norm for N:P:K use in India is about 4:2:1; the actual ratio was about 6:1.9:1 in the early 1970s and about 8.2:3.2:1 in 2012-13; the Nutrient Based Subsidy scheme, with per-nutrient subsidy and decontrolled P&K retail prices, began in 2010, while urea remained under a statutorily fixed price. Which of the following inferences can validly be drawn from these facts?

1. Relative to potash, the use of both nitrogen and phosphate increased between the early 1970s and 2012-13.
2. The per-nutrient design of the subsidy was by itself sufficient to bring the nutrient ratio closer to the agronomic norm.
3. Absolute consumption of potash in 2012-13 was lower than in the early 1970s.
4. Relative to potash, phosphate use in 2012-13 exceeded what the agronomic norm prescribes.

• A. 1 and 2 only
• B. 3 and 4 only
• C. 1 and 4 only
• D. 2, 3 and 4 only

Q6. India imports about 95% of its phosphate and all of its potash requirement. In this context, consider the following statements: Which of the statements given above is/are correct?

1. If the Government wishes to keep retail prices of P&K fertilizers stable, a rise in international MOP prices tends to raise the subsidy outlay.
2. A depreciation of the rupee against the US dollar would, other things being equal, reduce the subsidy needed to keep imported DAP affordable.
3. Higher domestic output of P&K fertilizers from domestically sourced raw materials would reduce the sensitivity of the subsidy bill to global prices.

• A. 1 and 3 only
• B. 2 and 3 only
• C. 1, 2 and 3
• D. 1 only

Q7. With reference to 'forced bundling' in fertilizer retail, consider the following statements: Which of the statements given above is/are correct?

1. It raises the farmer's effective cost of subsidised fertilizer even when the bag itself is sold at its printed maximum retail price.
2. The Parliamentary Standing Committee on Chemicals and Fertilizers (2026) noted that, apart from advisories and public appeals, there was no regulatory framework against it.
3. The Committee proposed tackling it through the Fertiliser (Movement Control) Order, 1973, since that Order governs retail sale at dealer points.

• A. 1 and 3 only
• B. 2 only
• C. 2 and 3 only
• D. 1 and 2 only

Q8. With reference to the Comptroller and Auditor-General of India (CAG) and its audit of the Nutrient Based Subsidy scheme, consider the following statements: Which of the statements given above is/are correct?

1. CAG reports relating to the accounts of the Union are submitted to the President, who causes them to be laid before each House of Parliament.
2. A performance audit is confined to checking whether expenditure had proper sanction, so the CAG's audit of the scheme could not comment on whether the Department had a road map for the scheme's objectives.
3. Because the subsidy is paid to private fertilizer companies, the CAG's audit was confined to the Department's accounts and did not examine how company retail prices were built up.

• A. 2 and 3 only
• B. 1 only
• C. 1 and 2 only
• D. 1 and 3 only