The Comptroller and Auditor General (CAG) has initiated a nationwide audit of fertilizer subsidies to investigate the alleged misuse of subsidized urea in at least 169 districts across several states, including the possibility of its export outside the country.
This audit, which began in May of this year, is expected to conclude by mid-2027, after which the findings will be presented during the winter session of Parliament. The government spends over 2 lakh crore rupees annually on subsidized urea, and excessive consumption in certain districts, exceeding national and state averages, has raised concerns within the government.
As part of the audit, the CAG will assess the efficiency and demand within the urea subsidy system. One hundred sixty-nine districts were selected to evaluate the alleged misuse; 149 were initially chosen by the CAG based on consumption patterns that exceeded average values, and an additional twenty districts were added later upon the Central government's recommendation to study their consumer profile.
The audit will cover the fertilizer movement mechanism, transportation conditions, freight subsidies, as well as the associated monitoring and control system. This comprehensive audit requires broad cooperation and participation from various government agencies, such as the GST network, the Ministry of Agriculture, and the railways, who will assist the auditors in assessing the fertilizer control system and regulator effectiveness.
The Ministry of Finance recently noted potential misuse of urea based on e-way bills, discovering that trucks were making detours or multiple stops. Furthermore, a parliamentary committee had expressed concerns regarding urea theft, particularly in border areas.
Officials also reported that the suspected diversion of subsidized urea from certain border districts in the states of Uttar Pradesh, Rajasthan, Punjab, and Bihar has raised doubts about its smuggling abroad. Thirty-seven districts with the highest urea consumption are located in Uttar Pradesh, sixteen in Bihar and Tamil Nadu, and fourteen in Punjab and Gujarat. Twenty districts added for further study are situated in Karnataka, Rajasthan, Madhya Pradesh, and Maharashtra.
Total urea consumption in India is estimated at approximately 400 thousand metric tons per year, of which more than 100 thousand metric tons are imported. Even domestic production requires a significant amount of imported liquefied petroleum gas (LPG), as fuel accounts for 90% of the input costs for urea production. One official noted that excessive consumption of subsidized urea increases the burden on energy bills due to additional subsidies and intensifies import dependence, in addition to increasing greenhouse gas emissions.
This official also added that since agricultural urea is subsidized universally, significant volumes have historically been diverted to non-agricultural sectors. Technical urea is a primary commercial raw material for the production of resins, adhesives, plywood, tableware, animal feed, and commercial explosives.
