Consider the following statements regarding the Urea Subsidy Scheme:
Statement 1: Urea is sold to farmers at a fixed Maximum Retail Price (MRP).
Statement 2: The subsidy is directly transferred to the bank accounts of farmers.
Which of the above is/are correct?
Show answer & explanation
Correct answer: A
Explanation
Answer: Only Statement 1 is correct.
Explanation:
In India, urea is the only fertilizer whose price is controlled by the government. Statement 1 is correct because urea is sold to farmers at a statutorily fixed Maximum Retail Price (MRP). Currently, the price of a 45 kg bag of Neem-coated urea is ₹242. Statement 2 is incorrect because the urea subsidy is not transferred directly into the farmers' bank accounts; instead, it is provided to fertilizer companies to enable them to make fertilizers available to farmers at lower prices. This subsidy is disbursed to the companies only after the actual sale of the fertilizer is recorded by the retailer through a 'Point of Sale' (PoS) machine.
Additional Points:
Nutrient Based Subsidy (NBS): This scheme applies to P and K (Phosphorus and Potassium) fertilizers, not to urea.
Objective: To ensure food security by making fertilizers available to farmers at affordable rates.
Potential Exam Questions and Answers:
Question: Which fertilizer's price is statutorily controlled by the government in India?
Answer: Urea.
Question: To whom is the subsidy on urea paid?
Answer: To the fertilizer manufacturing companies.