Fertilizer subsidy in India: who are the beneficiaries

Abstract

There is a general view in academic and policy circles that fertiliser subsidies are concentrated geographically on a relatively small number of crops and producers. In many cases they do not reach the targeted group(s). This paper examines the trends in fertiliser subsidy and issues of equity in its distribution between farmers and the industry, across regions/states, crops and different farm sizes. The study shows that fertiliser subsidy is more concentrated in a few states and interstate disparity in its distribution is still high though it has declined over the years. A fair degree of equity exists in the distribution of fertiliser subsidy among farm sizes. Based on the results, this paper justifies fertiliser subsidies and questions the rationale for a direct transfer of subsidy to farmers.