UPSC Prelims 2020 Q94: Indian Economy – Agriculture & Rural Development
With reference to chemical fertilizers in India, consider the following statements:
1. At present, the retail price of chemical fertilizers is market - driven and not administered by the
Government.
2. Ammonia, which is an input of urea, is produced from natural gas.
3. Sulphur, which is a raw material for phosphoric acid fertilizer, is a by - product of oil refineries.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 and 3 only
- (c) 2 only
- (d) 1, 2 and 3
Answer: (b) 2 and 3 only
Explanation
Chemical fertilizers in India
| Statement | Verdict | Fact |
|---|---|---|
| 1. At present, the retail price of chemical fertilizers is market-driven and not administered by the Government | Incorrect | The price of urea is fixed by the Government; other fertilizers get a fixed subsidy under the Nutrient Based Subsidy scheme |
| 2. Ammonia, which is an input of urea, is produced from natural gas | Correct | Natural gas supplies the hydrogen that is combined with nitrogen to make ammonia (Haber-Bosch process) |
| 3. Sulphur, which is a raw material for phosphoric acid fertilizer, is a by-product of oil refineries | Correct | Sulphur is recovered when crude oil and gas are cleaned; it makes sulphuric acid, which is used to make phosphoric acid |
Fertilizer pricing in India:
| Fertilizer | How the price is set |
|---|---|
| Urea | Statutory price fixed by the Government; the rest of the cost is paid as subsidy |
| Phosphatic and potassic | Nutrient Based Subsidy since 2010: fixed subsidy per kilogram of nutrient; companies set the price, under watch |
Statements 2 and 3 are right.
Answer: (b) 2 and 3 only.
Why each option is right or wrong
- (a) Incorrect. Statement 1 is false; the retail price of urea is administered by the Government.
- (b) CORRECT. Ammonia comes from natural gas, and sulphur is a by-product of oil refineries.
- (c) Incorrect. Statement 3 is also true; refineries are a main source of sulphur.
- (d) Incorrect. Statement 1 is false; fertilizer prices are not fully market-driven.
Key point
Urea: price fixed by Government. P and K fertilizers: Nutrient Based Subsidy (2010). Ammonia from natural gas (Haber-Bosch). Sulphur recovered at oil refineries.
Remember
Urea price is administered; ammonia comes from natural gas.
Common mistakes
- Thinking fertilizer prices were decontrolled fully; urea never was.
- Not linking natural gas to urea, which is why gas prices affect the subsidy bill.
- Doubting that sulphur comes from refineries; it is removed from fuels there.
Exam tip
Urea is the most controlled input in Indian farming. Any statement saying its price is market-driven is false.
Sources
- Department of Fertilizers — Nutrient Based Subsidy Policy and Urea Pricing Policy
- Economic Survey 2015-16 — Vol 1, Ch 9 (Reforming the Fertiliser Sector)