2026 Fertilizer Subsidy Program: The Ministry of Agriculture and the Department of Fertilizers are preparing to introduce a Direct Benefit Transfer (DBT) model for fertilizer subsidies, potentially slated for the upcoming fiscal budget. At present, the central government provides subsidy disbursements to fertilizer producers on a recurring basis. Payments are processed based on Aadhaar-verified transactions conducted through point-of-sale (PoS) terminals, a system implemented during the initial phase of the DBT rollout on April 1, 2018.
2026 Fertilizer Subsidy Program
After years of deliberation, the central government is moving toward a direct benefit transfer (DBT) framework to deliver fertilizer support directly to farmers, with expected implementation in FY 2022. Fertilizer department projections suggest an average annual requirement of Rs. 5,000 to Rs. 6,000 per farmer. This support would supplement the existing Rs. 6,000 provided under the PM Kisan Samman Nidhi Yojana.
Target Beneficiaries of the Fertilizer DBT Initiative
The annual central subsidy for fertilizers exceeds Rs. 70,000 crore, serving over 14.6 crore farmers who maintain an average landholding of 1.08 hectares. Beyond improving subsidy reach for small-scale farmers—who have historically seen fewer benefits—the direct cash transfer aims to discourage the indiscriminate or unscientific application of fertilizers by large landowners while curbing systemic wastage.
This initiative will facilitate the direct transfer of fertilizer subsidies to agricultural producers. By utilizing a DBT approach, the government aims to ensure streamlined urea subsidy distribution and transparent support. The Cabinet Committee on Economic Affairs (CCEA) has endorsed these reform measures, focusing on ensuring that farmers receive adequate urea supplies at affordable rates through an efficient, technology-driven delivery system.
2026 Urea Subsidy Support for Farmers
Fixed subsidy components for P&K fertilizers, introduced in April 2010, successfully reduced expenditure from Rs. 41,500 crore in FY11 to Rs. 26,369 crore by FY20. Conversely, urea subsidies rose during this timeframe from Rs. 24,337 crore to Rs. 54,755 crore. While the cost to produce gas-based urea is roughly Rs. 900 per 45 kg bag, farmers purchase it for Rs. 242, reflecting a discount of over 70%.
Previously, the government explored a system requiring farmers to pay market prices upfront, followed by a direct subsidy refund to their Aadhaar-linked accounts. This model was abandoned due to concerns regarding the financial burden on small-scale farmers. Currently, the government continues to pay manufacturers based on PoS-verified sales, a method in operation since April 1, 2018.