Whalesbook
Rising Farm Demand Fuels Imports
Demand for fertilizers spiked sharply in FY26 due to favorable weather conditions and expanded acreage. Farmers increased sowing of key crops like corn and rice during the Kharif season, directly boosting the need for urea and di-ammonium phosphate (DAP). The ongoing Rabi season's robust wheat sowing is expected to push consumption even higher. India's overall urea consumption has seen a steady climb, rising from approximately 31 million tonnes in 2013-14 to an estimated 40 million tonnes for 2025-26.
Subsidy Bill Under Pressure
The increasing reliance on imports significantly inflates the government's fertilizer subsidy bill. Total fertilizer subsidies have ballooned from ₹81,124 crore in 2019-20 to an estimated ₹1.83 trillion for 2024-25. Urea alone accounts for nearly 70% of this outgo, as it is sold to farmers at over 90% subsidy. This makes farmers pay less than a tenth of the actual cost, incentivizing excessive use of nitrogen-heavy fertilizers over other essential nutrients and contributing to imbalanced nutrient application.
Soil Health Degradation Concerns
Imbalanced fertilizer use is increasingly recognized as a major contributor to degrading soil health. Studies cited by the Indian Council of Agricultural Research and the agriculture ministry highlight declining organic matter, climate change, and excessive application of nitrogenous fertilizers as key factors worsening soil degradation and potentially lowering crop yields. A Parliamentary Standing Committee recommended farmer training on balanced nutrient use, crop rotation, and natural farming practices to counter these effects. However, industry insiders suggest that without price corrections via subsidy reductions, farmers will likely continue overusing subsidized urea.