Devendra Singh paid ₹242 for a bag of fertilizer last month. India paid ₹1,958 for the same bag. It has been doing this, for every bag, for nearly five decades.

The bag weighs 45 kilograms. It contains urea — the nitrogen compound that feeds most of the world’s crops. The price stamped on it has not changed since March 2018. It will not change next season either, regardless of what it costs to make, import, or ship. The government has promised that. Every government has promised that.

Devendra Singh farms 25 acres in Moga district, Punjab. His grandfather worked the same land with four bags of urea a year. Devendra uses fifteen. His yields are lower than his grandfather’s.

This is the story of how that happened. And of how a 33-kilometre waterway in the Persian Gulf — the Strait of Hormuz — became the place where fifty years of agricultural policy finally presented its bill.

The Last Reform That Wasn’t

On July 24, 1991, Finance Minister Manmohan Singh stood up in Parliament and did something no Indian finance minister had attempted in fourteen years. He announced a 40% increase in urea prices.

Singh was in his first month in office. India was on the verge of sovereign default. The IMF was at the door. The fertilizer subsidy was already one of the largest items in the national budget, having grown from nothing in 1977 to a programme swallowing billions of dollars that the government did not have. Cutting it, even partially, seemed like basic fiscal arithmetic.

What followed was not arithmetic. In Andhra Pradesh, farmers raided fertilizer warehouses. They looted trucks on the highway and demonstrated outside government offices. The Congress Parliamentary Party convened emergency meetings. The Prime Minister, Narasimha Rao, stayed away and let Singh face the caucus alone. Singh, by one account, cut a lonely figure as MP after MP told him that touching urea was political suicide.

By August 14, 1991 — three weeks later — the government had backed down. The increase was reduced to 30%. Within months, as political heat continued, it was reduced further. By 1992, when Singh successfully decontrolled prices for every other fertilizer — phosphorus, potassium, and a dozen other variants — urea alone was carved out and kept frozen.

The man who opened India’s economy to the world could not open its fertilizer market.

The Soil Doesn’t Lie

Here is a number that should appear in every agricultural briefing in South Block but doesn’t: 10.9:4.4:1.

That is India’s current ratio of nitrogen to phosphorus to potassium applied to agricultural soil — its NPK ratio, in the shorthand used by agronomists. The recommended ratio, based on decades of soil science, is 4:2:1. India is applying nitrogen at nearly three times the scientifically appropriate rate relative to its other nutrients.

In Punjab and Haryana — the two states that grow most of India’s wheat and rice, the states that feed the nation — the ratio is 31:8:1 and 27:7:1 respectively. Punjab applies nitrogen at nearly eight times the ideal level relative to potassium. The price signals have been clear and consistent for fifty years, and Indian farmers, acting entirely rationally, have responded to them.

The soil has also responded. India’s Soil Health Card program tested 1.3 crore samples between 2023 and 2025. The results: 64% of Indian soils are now rated low in nitrogen — despite half a century of drowning the land in nitrogen. Excess application degrades the soil’s biological structure. The soil has been chemically burned.

Devendra Singh’s family has increased urea application by 350% over a generation — from 1.25 quintals per hectare to 5.6 quintals. His paddy yield has fallen from 95 quintals per hectare in 2014 to 85 quintals today. More in, less out. The agronomic relationship between input and output has been severed by the very input that was supposed to sustain it.

Plants absorb only about 35–40% of the urea applied to them, according to Ashok Gulati of ICRIER, India’s most widely cited agricultural economist. The rest — 60–65% of every subsidized bag — either evaporates into the atmosphere as nitrous oxide or leaches into groundwater. Nitrous oxide is a greenhouse gas 272 times more potent than CO₂.

The Farmer Who Was Told He Was Being Helped

India’s fertilizer subsidy was always justified on a simple moral claim: poor farmers cannot afford global prices, and if fertilizer prices rise, they will plant less, food production will fall, and the poorest people in the country will suffer. This argument is not wrong. It is correct as far as it goes.

It does not go very far.

More than a third of India’s fertilizer subsidy disappears into the gap between the farmgate price and the market price. Some goes to industrial users — the plywood industry, the dye industry — who purchase subsidized urea and resell it at a 200% markup. Some crosses into Bangladesh and Nepal. The leakage rate in West Bengal, Bihar, and Assam, the border states, exceeded 51% in the 2013 Cost of Cultivation Survey.

The fiscal consequences of this have further punished the farmer. Since FY2022, India’s fertilizer subsidy bill has exceeded the entire budget of the Ministry of Agriculture and Farmers Welfare. Gulati and co-authors calculated in 2018 that investment in public agricultural goods generates five to ten times more poverty reduction per rupee than input subsidies. India chose the subsidy.

The Treasury’s Uncollectable Debt

In 1980–81, India spent ₹505 crore on fertilizer subsidies. In 2022–23, it spent ₹2,25,220 crore. That is a 446-fold increase in forty-two years on a program that has produced declining soil health, stagnating yields, and unchanged farm-gate prices.

There is a further institutional irony embedded in the subsidy’s architecture: the cost-plus pricing structure meant — mechanically, inescapably — that the more inefficient a factory ran, the more government money it received. The Standing Committee on Chemicals and Fertilizers noted this explicitly in 2020. Gulati and Banerjee confirmed in 2019 that the average production cost of Indian urea manufacturers actually exceeded India’s import parity price. The government was paying a premium to make urea domestically when it was cheaper to import.

India built a system that paid bad factories more money the worse they performed. It then commissioned six new ones.

The Emergency Response, and What It Doesn’t Fix

India moved fast after Hormuz closed. The government front-loaded fertilizer imports, rerouting supply through Russia and Morocco via the Cape of Good Hope — adding weeks to delivery times and hundreds of dollars per tonne to shipping costs. Domestic urea production was pushed 23% above normal through emergency gas procurement. By mid-March, fertilizer stocks were at record levels.

The Union Cabinet on April 8 approved a 10–21% increase in per-kilogram subsidy rates for Kharif 2026, at a cost of ₹41,534 crore — 12% above last season. The government presented this as decisive action. It was. It was also fiscally indistinguishable from every other crisis response since 1977: pay more, keep the price at ₹242, absorb the shock in the budget, and return to normal when the emergency passes.

Year	What Was Recommended	By Whom	Outcome
1991	Raise urea MRP by 40%	Finance Minister Manmohan Singh	Reversed
1998	Urea pricing reform	High Powered Fertilizer Pricing Committee	Shelved
2015	Per-acre DBT, price decontrol	Economic Survey of India	Not implemented
2017–18	Immediate pricing rationalization	Parliamentary Standing Committee — Agriculture	No action
2020	End cost-plus inefficiency model	Standing Committee — Chemicals & Fertilizers	Ignored
2022–23	Cut urea use 50% for soil health	Standing Committee — Chemicals & Fertilizers	Not adopted
2026	Strategic fertilizer raw material reserves	Chief Economic Advisor Nageswaran	Under discussion

CRISIL Ratings estimates the conflict will add ₹20,000–25,000 crore to India’s subsidy burden above FY27 estimates — and that assumes the ceasefire holds. War-risk insurance premiums for Gulf-route tankers surged tenfold in the first week. Even after ceasefires, shipping insurers price coverage on risk, not on diplomatic statements.

The Political Economy of a Price Tag

It is worth being precise about why ₹242 has survived every crisis, every committee report, every economic survey, and every government since 1977.

The beneficiaries of the current system are not, primarily, the small farmers the system claims to serve. They are: large landholders, who receive a disproportionate share of the subsidy relative to their size; fertilizer manufacturers, who benefit from guaranteed cost-plus profits and a captive, price-insensitive market; state politicians in Punjab, Haryana, and Uttar Pradesh, who distribute urea allocations as a patronage mechanism; and industrial users who access subsidized urea through leakage channels the government cannot fully close.

The farmer in Moga who uses fifteen bags of urea and gets declining yields is not the primary beneficiary of the system that claims to be his lifeline. He is its most visible justification and its most consequential victim.

What a ₹242 Bag Actually Costs

There is a question worth asking at the end of all this: what, precisely, has India paid for fifty years of a ₹242 bag of urea?

The fiscal bill is clear enough: a subsidy program that grew from ₹505 crore in 1980–81 to ₹2,25,220 crore in a single bad year. The FY26 fertilizer subsidy of ₹1.9 trillion exceeded the entire agriculture budget of ₹1.5 trillion. The money that bought cheap nitrogen was money that did not build irrigation canals, fund crop research, insure harvests, or construct cold storage.

The soil bill is harder to monetize but no less real: an NPK ratio nearly three times the recommended level across India and eight times the recommended level in the country’s most productive agricultural state; 64% of soils rated nitrogen-deficient despite being saturated with nitrogen; soil organic carbon in the rice-wheat belt halved over two decades; an agricultural yield-per-input ratio that has fallen 73% since the 1970s.

The farmer’s bill is the most invisible: a treadmill requiring more and more input for declining output; 25 crore Soil Health Cards distributed and almost none used; ₹20,000 crore in public investment per year that didn’t happen because the subsidy consumed the space for it.

And the strategic bill arrived on March 6, 2026, in a four-paragraph BSE filing from a plant in Gujarat that was built to prove India didn’t need the Gulf: sixty percent. Not enough gas. Not enough urea. The Atmanirbhar plant, rationing.

The Strait of Hormuz is only 33 kilometres wide at its narrowest point. For fifty years, India kept its farmers, its soil, and its treasury on the other side of it, and called the arrangement affordable.