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India’s cheap, subsidised urea has helped farmers access a key source of nitrogen, but its low price can also encourage nutrient imbalances, carry environmental and fiscal costs, and leave fertiliser production exposed to imported gas. The case for reform is not that urea has no value; it is that keeping one nutrient unusually cheap can distort decisions about what crops to grow and what their soils need.
Why did India make urea cheap?
Urea is a nitrogen fertiliser. In her October 2, 2026 Hindustan Times article, climate-tech investor Mridula Ramesh credits synthetic urea with helping raise farm productivity during India’s Green Revolution. The policy rationale remains visible in the Government of India’s budget documents: make fertilisers available to farmers at reasonable prices while providing producers a reasonable return.
That support has a trade-off. When the price farmers pay for urea is held low relative to other fertilisers, the price signal can favour nitrogen even where a crop or soil needs a different balance. The issue is not that nitrogen is unnecessary, but that nutrient needs vary by crop, soil and growth stage. There is no single ideal NPK ratio that suits every field.
How can a low urea price distort nutrient use?
Ramesh argues that urea remained comparatively cheap while phosphorus- and potassium-based fertilisers became relatively more expensive, encouraging farmers to use more nitrogen. She reports an average Indian NPK ratio of 10.9:4.4:1 and a Punjab ratio of 50:2:1. These are figures reported in her article, not independently verified here; they should not be read as universal targets or as a prescription for an individual farm.
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The practical concern is that a farmer responds to both agronomy and economics. If one nutrient is cheaper to buy, applying more of it may appear attractive, even when balanced nutrition would be more suitable. That can mean spending on the wrong input for a particular field while other nutrient needs remain unmet. A soil test and crop-specific advice are more useful for deciding what to apply than a national ratio alone.
What does the subsidy cost, and what does the budget target?
The Department of Fertilizers’ Government of India 2026–27 Outcome Budget allocates ₹1,16,805 crore to the Urea Subsidy scheme. The same document sets production, sales and availability targets; these are targets, not reported final outcomes.
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| 2026–27 Urea Subsidy scheme measure | Outcome Budget figure | What it means |
|---|---|---|
| Financial outlay | ₹1,16,805 crore | Official allocation for the Urea Subsidy scheme |
| Domestic production | 296 lakh metric tonnes | Target for total domestic urea production |
| Imports | Reduction of 2 lakh metric tonnes | Target reduction; the document also says imports are arranged because domestic production is inadequate to meet fertiliser demand |
| Total sales | 392 lakh metric tonnes | Target for total urea sales |
| Availability | 422 lakh metric tonnes | Target for urea availability |
The budget’s stated goals are affordable fertiliser access and a reasonable return for producers, not simply maximising urea use. Ramesh separately estimates ₹1.71 lakh crore for the Department of Fertilizers in the 2026–27 Union Budget. That broader estimate was not independently verified here and is not the same measure as the official ₹1,16,805 crore allocation for the Urea Subsidy scheme.
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Environmental effects
Ramesh links intensive synthetic nitrogen use to greenhouse-gas emissions and water pollution. She reports a global cradle-to-grave estimate of 1.13 billion tonnes of CO2-equivalent emissions from synthetic nitrogen fertiliser in 2018, and says nitrous oxide is 273 times as powerful as CO2. The underlying study and the time horizon for that potency comparison were not separately established here, so these should be treated as figures in her account rather than independently verified measurements.
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Her article also reports that around 70% of Soil Health Card samples were deficient even in nitrogen. Without the underlying dataset and sample details, that figure cannot establish how representative the samples are or what caused the deficiencies. It does, however, underline why the price of urea alone cannot tell a farmer whether more nitrogen is the right choice for a field.
Crop diversity and pulses
Ramesh argues that cheap synthetic nitrogen can weaken the relative incentive to cultivate pulses. Her reform case therefore reaches beyond fertiliser choice: it asks whether support that favours a nitrogen-heavy input also shapes the crops farmers find financially viable. This is a causal argument made in the article, not a quantified, independently verified estimate of how much subsidy changes pulse acreage.
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She also cites a 2025 paper reporting a 16.0% yield increase from legume cover crops across 3,160 observations in 35 countries. The paper was not separately located here, and that reported result should not be taken as a guaranteed yield gain for Indian farms or for every crop and soil.
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Reliance on imported gas
Urea production is also exposed to energy supply. Ramesh reports that imported gas supplied about 85% of the gas used by India’s fertiliser sector from April 2025 to January 2026. She also reports that monthly urea production fell from 24.7 lakh tonnes in March 2025 to 17.5 lakh tonnes in March 2026 amid gas disruption. Those figures and the stated connection were not independently checked here. The official budget does confirm that imports are arranged because domestic production is insufficient to meet fertiliser demand, but it does not validate those gas or monthly production figures.
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- [VERSATILE PLANT FOOD]: Works as a plant fertilizer for lawns, gardens, fruit trees, shrubs, crops, and ornamental plants, making it a reliable option for homeowners, landscapers, and growers
- [EASY GRANULAR APPLICATION]: Uniform granules spread easily with broadcast and drop spreaders, allowing consistent coverage and precise fertilizer application across lawns and garden areas
- [ECONOMICAL 10 LB BAG]: 10 lb bag provides excellent coverage and value, making it a cost-effective fertilizer for lawns, farms, landscaping, and garden maintenance
Is cheap urea a problem for Indian agriculture?
It can be, if a low administered price steers use away from what a particular crop and soil need, adds to public expenditure, or makes farming more dependent on a narrow set of crops and imported production inputs. But the price protection also serves a real policy purpose: the government says the scheme is intended to keep fertilisers affordable for farmers and provide producers a reasonable return. The question is how to protect access without making one nutrient’s price a poor guide to balanced use.
Price comparisons need care, too. Ramesh says Indian farmers paid about one-tenth of the American retail price for urea in the period following the Russia-Ukraine war. The article’s comparison is not established here as like-for-like: the underlying price definitions are not verified, so the ratio should not be treated as a direct comparison of equivalent products, taxes, dates or market conditions.
What reforms does the article propose?
Ramesh’s proposed direction is to improve nutrient balance, reconsider how input subsidies are delivered, and strengthen support for pulses. She discusses a 2024 proposal by Ashok Gulati and Ritika Juneja to replace part of the fertiliser subsidy with direct cash transfers while allowing prices to reflect costs more closely. The proposal is not shown in the reviewed official budget documents as adopted policy.
- Use nutrients according to field need. Crop, soil and growth stage matter; a single NPK ratio is not an appropriate target for every farm.
- Consider partial direct transfers. A transfer could protect farmer purchasing power while reducing the extent to which public support is tied to a particular fertiliser’s price. The design would need to preserve affordability and account for differences among farmers and regions.
- Support pulses and crop diversity. This addresses the article’s concern that input-price incentives can influence what farmers grow, not just how much fertiliser they apply.
These measures involve difficult choices. Changing the price farmers face could make fertiliser less affordable unless compensation is timely and adequate; changing support also has distributional and implementation consequences. Ramesh captures the political challenge in her own words: “Convincing farmers that cheaper urea is not necessarily better urea will not be easy.”
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