Economic Survey Calls for Modest Urea Price Hike, Direct Transfers to Farmers

The Economic Survey 2025-26, tabled in Parliament on January 29 called for a "modest increase" in the retail price of urea which has remained unchanged since March 2018 at ₹242 per 45-kg bag – while transferring an equivalent amount directly to cultivators on a per-acre basis.

The survey stated that the proposed shift from input subsidy to income support is targeted to correct three-decade-old imbalance in fertiliser use as continued divergence between nitrogen and other nutrients has resulted in the degradation of soil quality, crop response and undermined environmental stability.

Elaborating the deterioration in the amount of nitrogen-phosphorus-potassium (N:P:K) ratio used by Indian farmers, the survey flagged that N:P:K ratio stood at recommended levels for most Indian soils at 4:3.2:1 in 2009-10 but deteriorated to 10.9:4.1:1 in 2023-24, due to excessive nitrogen application through subsidised urea. Agronomic benchmarks for most crops and soil types indicated a ratio closer to 4:2:1.

"A more durable correction requires re-anchoring fertiliser decisions in soil and crop requirements rather than in administered price distortions," the Survey said, proposing to separate farmer income support from fertiliser purchase by allowing nutrient prices to reflect agronomic scarcity,” the survey stated.

According to reports, urea consumption in the current financial year is expected to reach an all-time high of nearly 40mn tonnes due to excess demand.

With the agriculture and allied services estimated to grow by 3.1% in FY26, supported by favourable monsoon in first half, growth is projected to remain below the long-term average of 4.5%.

In addition, the survey stated that crop-sector growth, which accounts for more than half of agricultural GVA, reflected significant year-to-year variability and has not exhibited a sustained upward trend, reflecting limited productivity gains over time.

Whereas, allied activities, particularly livestock and fisheries, have grown at relatively stable rates of around 5-6%. As their share in agricultural GVA has increased, aggregate agricultural growth has increasingly reflected a weighted outcome of volatile crop performance and a relatively stable expansion in allied sectors. By FY25, it stood at 2.17 relative to the 2011–12 base year, compared with 1.55 for industry, 1.41 for manufacturing and 1.75 for services.

Industry Perspective on Agriculture

Commenting on the Economic Survey’s findings on Indian agriculture and the key challenges affecting productivity and farm incomes, RG Agarwal, Chairman Emeritus, Dhanuka Agritech Limited said, “The Economic Survey 2025–26 shows that Indian agriculture has made steady progress in recent years, with foodgrain production remaining at high levels and agriculture continuing to support nearly half of India’s workforce while contributing close to one-fifth of the economy. Better irrigation coverage, wider use of technology, and diversification into horticulture and allied activities have helped improve resilience at the farm level.”

Aggarwal noted that the survey highlighted key challenges that affect productivity and farm incomes, with crop yields for pulses and oilseeds remaining below global averages, shrinking landholdings and climate variability adding to production risks and cost pressures. He said this underlines the need to focus on improving per-hectare productivity rather than only increasing acreage, alongside greater emphasis on research-led innovation, balanced crop protection practices, and timely adoption of modern agricultural solutions to secure sustainable and stable income growth for farmers.