Farm inputs: seeds, fertilisers and mechanisation

The first principle

A crop is a factory that turns sunlight, water and nutrients into food, and its output is capped by whichever input is scarcest, which agronomists call the law of the minimum. Good seed sets the ceiling on yield, fertiliser and water decide how close the crop gets to it, and machines and labour decide whether each step happens on time. India subsidises these inputs heavily, so the economics of inputs is largely about whether prices tell the farmer the truth about what the soil and the crop need.

The core

Seeds

• Seed sets the yield ceiling. That is why the green revolution began with dwarf wheat and rice varieties. Seed passes through a chain: breeder seed from the plant breeder, foundation seed multiplied from it, and certified seed sold to farmers after testing for purity and germination.
• Hybrid and open pollinated seed. A hybrid is the first generation cross of two parent lines and yields more, but its seed does not breed true, so the farmer must buy it each season; seed of an open pollinated variety can be saved and resown. The seed replacement rate is the share of area sown with fresh certified or quality seed rather than farm saved seed, and it is high for hybrids such as maize and cotton and low for many pulses and oilseeds.
• The law. The Seeds Act 1966 regulates the quality of seed of notified kinds and varieties, and the Seeds (Control) Order 1983 licenses dealers. The Protection of Plant Varieties and Farmers' Rights Act 2001 gives breeders rights over new varieties but keeps the farmer's right to save, use, exchange and sell farm saved seed, except as branded seed of a protected variety. A draft Seeds Bill, published for comment in November 2025, would replace the 1966 Act with compulsory registration of varieties sold and stiffer penalties for spurious seed.
• Genetically modified seed, such as Bt cotton approved in 2002, is covered in the note on GM crops, including the control of cotton seed prices from 2016.

Fertilisers and how they are subsidised

• The three main nutrients. Nitrogen (N) builds leaves and protein, phosphorus (P) roots and energy transfer, and potassium (K) water balance and disease resistance; sulphur, zinc and boron are also widely deficient in Indian soils. Urea supplies nitrogen, diammonium phosphate (DAP) nitrogen and phosphorus, and muriate of potash (MOP) potassium.
• Urea is price controlled. Its retail price is fixed by the government at Rs 242 for a 45 kg bag, excluding the neem coating charge and taxes, and the subsidy paid to manufacturers and importers is the gap between their assessed cost and that fixed price, so the Union budget absorbs any rise in gas or import prices. The New Urea Policy 2015 set energy efficiency norms for plants, and all urea has been neem coated since 2015, which slows the conversion of nitrogen and makes diversion to industry harder.
• Phosphatic and potassic fertilisers fall under the nutrient based subsidy (NBS), in force since 1 April 2010, which pays a fixed subsidy per kilogram of N, P, K and sulphur, announced for each season, while companies set retail prices. When world prices rise, the subsidy rate must be raised or farmers pay more.
• The price gap distorts use. Figure 1 shows that a kilogram of nutrient costs the farmer over three times as much in DAP as in urea, so nitrogen is overused. The agronomic benchmark ratio of N to P to K is about 4:2:1, but the Economic Survey 2025-26 put India's ratio at about 7:2.8:1 in 2019-20 and 10.9:4.1:1 in 2023-24; Figure 2 shows the drift. Excess nitrogen leaks as nitrate and nitrous oxide, as the sustainable agriculture note explains.

Dimensions

• Fiscal. The fertiliser subsidy is the second largest subsidy after food: the Union Budget 2026-27 provided about Rs 1.71 lakh crore for urea and NBS together, and the actual bill rises in any year when world prices of gas, urea or phosphates rise.
• Import dependence. India imports all its potash, much of its phosphate rock and DAP and part of its urea, so world prices and supply from a few exporting countries feed straight into the budget; revived urea plants at Ramagundam, Gorakhpur, Barauni and Sindri aim to cut urea imports.
• Soil health. Cheap nitrogen with too little potassium, sulphur, zinc and organic matter has left soils unbalanced, which lowers the yield response to each additional kilogram of fertiliser, so farmers apply more to get the same yield.
• Labour and timing. Rising rural wages have made machines cheaper than hired hands for ploughing, threshing and harvesting, and a few days' delay in sowing lowers yield, so mechanisation is about timeliness as much as labour.
• Health and ecology. Pesticide residues, poisoning of workers while spraying and the loss of pollinators are costs borne by people who never bought the pesticide.

In practice

Soil and fertiliser schemes

• Soil Health Card scheme, launched in February 2015 at Suratgarh in Rajasthan, tests each holding for twelve parameters, from N, P and K to micronutrients, pH, salinity and organic carbon, and recommends doses; since 2022-23 it is part of the Rashtriya Krishi Vikas Yojana.
• Nano urea, launched by the Indian Farmers Fertiliser Cooperative (IFFCO) in 2021, is a 500 millilitre bottle of nitrogen particles sprayed on leaves and promoted as a substitute for part of the bagged urea; nano DAP followed in 2023, though evidence from field trials on how far it can replace granular urea without yield loss is mixed.
• PM-PRANAM (Programme for Restoration, Awareness, Generation, Nourishment and Amelioration of Mother Earth), approved in June 2023, gives a State that cuts chemical fertiliser use 50 per cent of the subsidy it saves as a grant, and One Nation One Fertiliser (2022) sells all subsidised fertiliser under a single "Bharat" brand.

Machines and pesticides

• The Sub Mission on Agricultural Mechanisation (SMAM), from 2014-15, subsidises machines for individual farmers and funds custom hiring centres and farm machinery banks, so a small farmer can rent a tractor, seed drill or harvester by the hour instead of buying one. India is the world's largest maker of tractors, but mechanisation is uneven: land preparation is largely mechanised, while sowing, weeding and harvesting of many crops are still done by hand.
• Namo Drone Didi, approved in November 2023 with Rs 1,261 crore, gives drones to 15,000 women's self help groups to rent out for spraying fertiliser and pesticide, and machines such as the Happy Seeder, subsidised under the crop residue management scheme, let wheat be sown without burning paddy straw.
• Pesticides are registered under the Insecticides Act 1968 by the Central Insecticides Board and Registration Committee. The Pesticide Management Bill 2020, which would have tightened registration and compensation for harm, was introduced in the Rajya Sabha but not passed. Deaths of cotton farmers from spraying in Yavatmal, Maharashtra, in 2017 exposed the weakness of enforcement, and integrated pest management, which sprays only when pest damage would cost more than control, is the official approach.

Issues and way forward

• The urea price is the root distortion. Urea's fixed price has barely changed while other fertilisers became dearer, so the Economic Survey 2025-26 suggested a higher urea price returned to farmers as a direct transfer per hectare, which would keep the farmer's income whole while letting prices guide the nutrient mix. Bringing urea under the nutrient based regime, at least gradually, is the long standing recommendation.
• Leakage and diversion. Subsidised urea is diverted to industry and across borders, so sale through point of sale machines with Aadhaar authentication, already in use, needs a cap on bags per farmer.
• Spurious seed and pesticide. Weak testing laboratories and low penalties let fake products reach farmers, so the new Seeds Bill and a revived pesticide law need strong enforcement and quick compensation.
• Soil testing without follow up. A card is useful only if the recommended mix is available and affordable, so balanced fertiliser pricing, village level testing and advice through Krishi Vigyan Kendras must go with it.
• Machines for small farms. Large machines suit large fields, so custom hiring through farmer producer organisations (FPOs) and cooperatives, small machines designed for hill and rainfed farms, and credit for rural entrepreneurs who rent them out will spread mechanisation more than subsidies for individual purchase.

Common confusions

• Seeds Act and the PPV&FR Act. The Seeds Act 1966 is about the quality of seed sold, while the Protection of Plant Varieties and Farmers' Rights Act 2001 is about ownership of new varieties and the rights of breeders and farmers.
• Urea subsidy and NBS. Under the urea regime the price is fixed and the subsidy varies, while under NBS the subsidy per kilogram of nutrient is fixed and the price varies.
• Neem coated urea and nano urea. Neem coating slows the release of nitrogen from ordinary granular urea, while nano urea is a separate liquid product sprayed on leaves.

For the exam

• Keyword bank: law of the minimum, breeder, foundation and certified seed, seed replacement rate, hybrid seed, farmers' rights, nutrient based subsidy, New Urea Policy 2015, neem coated urea, NPK ratio of 4:2:1, nutrient use efficiency, Soil Health Card, custom hiring centre, integrated pest management, direct transfer of fertiliser subsidy.
• Previous year questions: Practise the previous year questions on this topic →
• Use in an answer:
  • Introduction with data: India's fertiliser use ratio of nitrogen, phosphorus and potassium widened to 10.9:4.1:1 in 2023-24 against a benchmark of 4:2:1, because urea is priced far below other fertilisers (Economic Survey 2025-26).
  • Introduction with a law: The Protection of Plant Varieties and Farmers' Rights Act 2001 made India one of the few countries to protect both the breeder's right to a new variety and the farmer's right to save and exchange seed.
  • Conclusion: Input subsidies are best judged by the yield they buy, so pricing nutrients by what the soil needs and paying farmers directly would serve both the farm and the budget.
  • Conclusion: Seed, fertiliser, water and machines work together, so a policy that cheapens one input while starving the others cannot raise productivity for long.