Containing the Fertilizer Subsidy in India - An Analysis of Subsidy Containing Strategies and its Outcome

By providing a conducive policy environment in the early days, the Government tried to build a base for the fertilizer industry by encouraging fertilizer products' consumption and distribution. But all these caused a high cost on Government as the subsidy out goes to the sector was mounting. There was a shift in the focus of the Government after the reforms. With the economic reforms, containing the fertilizer subsidy burden and foreign exchange burden on the import of fertilizers has become a serious concern of the State. By introducing policies for changing the farmgate prices, reducing the cost of production and efficient distribution of subsidies, the State tried to contain the subsidies in the post-reform era. Using the data from Fertiliser Statistics (FAI), Government Budgets and Department of Fertilizers, Government of India, the present paper is an enquiry into the Government strategies to contain the fertilizer subsidy and its impact on it. Analysing this question with the Economic Liberalisation framework, it is revealed that the subsidy-containing measures had a positive effect on it as the fertilizer subsidy either remained more or less constant or declined after 2010 in terms of both absolute amounts and share to total GDP & Agriculture GDP, even though the total fertilizer subsidy touched a record high of Rs. 140122.32crores in 2021-22