Nutrient Based Subsidy

Imagine a government subsidy programme that pays based on the actual nutritional value of the food being sold, rather than paying a flat amount per packet regardless of what is inside. Nutrient Based Subsidy applies that exact logic to fertiliser, paying a fixed subsidy for each unit of nitrogen, phosphorus, potassium and sulphur a fertiliser actually contains.

Introduced to correct the imbalance created when only urea, essentially pure nitrogen, was heavily subsidised, NBS extended a calibrated subsidy to other nutrients as well, intending to nudge farmers toward more balanced fertiliser use rather than over relying on cheap urea alone. In practice, urea has remained outside full NBS pricing and continues under its own separate, deeper subsidy, which is exactly why India's fertiliser use is still visibly skewed toward nitrogen relative to phosphorus and potassium.

For fertiliser companies like Coromandel International, Chambal Fertilisers and RCF, the government's annual NBS rates, announced separately for each nutrient, directly determine how much subsidy revenue they can expect to receive on top of what the farmer pays, making it one of the most closely tracked policy announcements in the entire sector.