Indian agriculture has the responsibility to feed more than a billion of peoples, livestock’s and agro based industries. To fulfill this need, the only way to increase crop yield with the help of modern inputs is a must. Indian agriculture is the presence of small and marginal farmers in large section of the population. They cannot always afford to use capital inputs like machines and tractors and adopt new technology for crop production. They face resource constraints while doing so and the size of land is not economically suitable too. They are left with the option, use of consumable modern inputs to enhance the land productivity. Out of these consumable inputs, fertilizers are the only input to help in increasing yield. In this connection, the details of factors influencing for fertilizer consumption is analyzed and results are presented in Table 1.

Fertilizer consumption is influenced by many determinants. The demand for fertilizers is derived demand i.e., demand for fertilizer is depends on the demand for the crop cultivated and the price received for the same crop. Demand for fertilizers is also influenced by prices of fertilizers, GCA, area under irrigation, availability of credit to the cultivators, etc. The demand side determinants like area under irrigation reflected a growth rate of 1.42 per cent over the 34 years while the average minimum support prices show a growth rate of 7 per cent. The short term institutional credit registers a growth rate of 17 per cent, which is due to the concerted efforts to make credit availability easy to the farmers. Quantum of annual rainfall is important factor affecting for application of fertilizers and has resulted to increase by 0.33 per cent. The results are conformity with the Nagraj (1983).

Subsidies play a huge role in determining fertilizer consumption. They form a major part of the total subsidy expenditure of the government as reflected by 14 per cent of growth rate. Sometimes it is claimed that the structure of fertilizer subsidies leads to the imbalance in use of fertilizers. Indian soils are now deficient in many micro nutrients as well. Thus, managing subsidies such that it will lessen the burden and promote balanced use of all fertilizers is the need of the hour. The import of fertilizer has significantly increased during the study period as reflected by growth rate of 5.37 per cent on the contrary, growth rate of domestic fertilizer production registered by 3.55 per cent. The consumption of fertilizers has been increasing over the period by reflecting the growth rate of 4.16 per cent per annum. However, there are still certain reasons which impede the extensive use of fertilizers. These are explained clearly by Venugopal (2005) as: (i) non-availability of fertilizers in time, (ii) capital/ credit constraints, (iii) not growing crops where fertilizer use is profitable, (iv) non-availability of irrigation water, (v) desired type of fertilizer not available, (vi) higher price than output price, (vii) soil deterioration, and (viii) FYM available. These reasons can be considered valid in the current period too. Therefore, the current consumption pattern of fertilizers in India is repeatedly said to have further scope of efficient and balanced use with increased intensity so that it will improve agricultural profitability.

Given the importance of the fertilizers, role played in strengthening Indian agriculture, the government has continuously taken up steps to ease the consumption of fertilizer by farmers. There are several factors that contribute to the increase in fertilizer consumption. Among them, MSPs, augmentation of area under irrigation, availability of credit, etc. plays an important role in determining the demand of fertilizers from the field. On the contrary, domestic production, total imports of fertilizers, and subsidy extended to the sector are significantly affecting the supply of fertilizers in the country. Increase in the output prices, area under irrigation and credit availability are all institutional factors. They show a decent growth over time. Concerted efforts towards achieving this growth has to be credited, however they have their own limitations too. Not all farmers are able to benefit themselves from support prices. The spread of irrigation has to be intensified too. Moreover, in case of credit, non- institutional sources still show their presence in the agricultural credit system. Keeping in view of all these potential factors, the regression were employed for demand side consumption model and results are presented in Table 2.

The high R square value (0.95) denotes that 95 per cent of variation in the fertilizer consumption is explained by the variation in the explanatory variables. The model is significant at 1 per cent level and all the variables are also considered as significant at one per cent level. The period under consideration witnessed increasing consumption as the green revolution technology was more or less spread across the states. Moreover, the policy changes made fertilizer prices to fluctuate due to decontrol. As mentioned earlier, increasing the support prices was the alternative policy option adopted. The support prices have been continuously increasing over the period. Though increase in support prices was not successful as a policy alternative to increase fertilizer consumption, the model shows that it does have a significant role to play in determining the consumption of fertilizers. It is well established from the result by increasing one per cent area under irrigation, fertilizer consumption will increase by 135.84 thousand tonnes. Similarly, by increasing one per cent MSP, fertilizer consumption will increase by 4.85 tonnes. Short term institutional loans (STCL) reflected a negative relation, which means by one per cent increasing Short term institutional loans (STCL) the fertilizer consumption will declined by 2.96 tonnes. This may due to discouraged private sectors production and import of chemical fertilizer due to which total supply could not be increased as expected.

The regression results of supply side consumption model are given in Table 3. The result shows the importance of domestic production in fertilizer consumption. Increase in domestic production with the efficient capacity utilization will directly affect the fertilizer consumption.

From the table the high R square value (0.99) denotes that 99 per cent variation in the consumption of fertilizers is explained by the variation in the explanatory variables. All the three independent variables in the model such as production (NPTP), import (TFIM) and subsidy (CSUB) are significant at one per cent level with the ‘t’ value of 28.26, 9.81 and 3.86, respectively. So, it is important to import the fertilizers to meet the gap between domestic production and total demand since we have less production. In case of K fertilizers, the country is dependent on imports fully. As discussed in the previous section, imports (TFIM) have shown a higher growth as compared to domestic production (NPTP). Therefore, again the need to augment domestic production is emphasized here. Though subsidy becomes a huge burden on the government, it plays a major role in determining the consumption. Therefore, it is important to allocate subsidies in such a way that reduce the burden and promote balanced use of fertilizers.

Logistic model used for forecasting of fertilizer demand till the year 2030, is presented in Table 4. The result shows that total fertilizer demand will be increased by around 7.04 million tons in next five years (i.e. 48.68 million tons during 2025) than now i.e.39.70 million tons. By the year of 2030 the total requirement of fertilizer consumption will be 57.32 million tons. The result also indicate that the forthcoming years will be experienced continuous rise in the fertilizer demand. Hence the domestic production of fertilizer has to be promoted to meet the increasing requirement instead of importing of fertilizers. The estimated gross cropped area during next five years will increased by 2.48 million hectare and by the year of 2030, it will reached to 206.72 million hectare. Similarly, fertilizer consumption will be increased by 32.17 kg/hectare in next five year and at the end of the year 2030, it will be increased up to 277.27kg/hectare.

The forecast suggests that by 2025, per hectare fertilizer consumption will exceed the level of 230 kg, which will be double the amount of current usage of fertilizer. However, this is still below the level of the intensity of usage of fertilizer in other countries. According to the World Bank data, per hectare fertilizer consumption in Bangladesh during the year 2013 was 208.7 kg, which is higher than India though arable land in Bangladesh is lesser than India and likewise China, Colombia and Malaysia’s fertilizers consumption rate were 364.4 kg, 648.8 kg and 1726.6 kg, respectively, which was higher than India during the same period. No wonder these countries experienced higher crop productivity too. Data shows that the fertilizer consumption in 2013 for the middle income countries was 132.1 kg and that of upper middle income countries this was 144.7 kg. This means fertilizer intensity in India matches with most of the countries; however, we still have scope to improve the same.

So, it is clear from the data that the domestic production of fertilizers has increased over the period. In case of N and P, the country is near to achieving self sufficiency. However, addition of new capacity and efficient use of existing capacity is still lagging behind. If we compare the growth rates, imports have shown a higher growth. This has many implications with the country being completely dependent on imports for K fertilizers, which adds to the burden upon the government. Thus, policies have to be adopted to create encouraging environment for domestic industries and existing industries have to increase their efficiency. The increasing requirement should be met with increasing domestic production, instead of increasing imports. International prices of fertilizers are also increasing, adding to the fiscal burden of the government. Conducive policy structure for domestic production is a must to reduce the subsidy burden of the government.