How does the PM-PRANAM incentive mechanism work?

PM-PRANAM rewards states and Union Territories that bring down their chemical fertilizer consumption — urea, DAP, MOP and NPK complexes — against their last three-year average baseline. The reduction in the central subsidy outlay for that state (i.e. the subsidy that would otherwise have been paid on the fertilizers no longer consumed) is treated as the subsidy saving. Fifty per cent of that saving is given back to the state as a grant under PM-PRANAM. Within the grant, 70% is earmarked for asset creation related to sustainable agriculture and alternate fertilizer adoption at the village, block and district level — bio-input centres, manure-management infrastructure, soil-testing labs and demonstration units — and 30% is used to reward farmers, panchayats, FPOs and SHGs that have actually reduced chemical-fertilizer use.

What counts as 'reduction' in chemical fertilizer use under PM-PRANAM?

Reduction is measured at the state / UT level against the state's three-year average chemical-fertilizer consumption (urea, DAP, MOP and NPK complexes), with the assessment year compared to that rolling baseline. Performance is tracked through the Integrated Fertilizer Management System (iFMS) of the Department of Fertilizers, which already records subsidy-bearing sales at the retailer level via PoS devices under the Direct Benefit Transfer (DBT) mechanism for fertilizers. Adoption of alternate nutrient sources — nano-urea, nano-DAP, Sulphur-Coated Urea (Urea Gold), bio-fertilisers, organic fertilisers, city compost, FOM and PROM — is what allows a state to deliver the underlying conventional-fertilizer reduction. State-level grant amounts are not pre-announced; they vary by state and assessment year based on actual subsidy savings.

What alternate nutrients does PM-PRANAM encourage?

PM-PRANAM promotes the basket of balanced and alternate nutrients introduced alongside it under the wider nutrient-management package: nano-urea (IFFCO commercial launch in June 2021 at ₹240 per 500 ml bottle, one bottle designed to substitute approximately one 45 kg bag of conventional urea), nano-DAP (IFFCO commercial launch in April 2023 at ₹600 per 500 ml bottle), Sulphur-Coated Urea branded 'Urea Gold' launched by the Prime Minister in July 2023, neem-coated urea, bio-fertilisers, organic fertilisers including Fermented Organic Manure (FOM) and Phosphate-Rich Organic Manure (PROM), and city compost. The Department of Fertilizers also pays a Market Development Assistance (MDA) of ₹1,500 per tonne to manufacturers of FOM, PROM and city compost to keep these alternate nutrients price-competitive at the farm gate.

How does PM-PRANAM converge with NMNF, PKVY, Soil Health Card and MOVCDNER?

PM-PRANAM is the financing-incentive layer; the cluster-level chemical-fertilizer reductions that earn a state the grant are produced on the ground by other schemes. Hectares under the National Mission on Natural Farming (NMNF) are strictly cattle-based and chemical-free — every NMNF hectare reduces a state's conventional urea / DAP demand and counts toward the PM-PRANAM baseline. PKVY organic clusters certified under PGS-India play the same role. The Soil Health Card scheme supplies the soil-test baseline and crop-wise nutrient recommendations that let states avoid blanket fertilizer application. MOVCDNER drives organic value-chain conversion in the eight North-Eastern states. Per Drop More Crop (PMKSY-PDMC) reduces fertigation waste, and PM-KUSUM solar pumps cut diesel + electricity bills that would otherwise subsidise over-application.

What is the funding source — and why does PM-PRANAM have no separate budget?

PM-PRANAM is deliberately designed as a savings-recycling scheme rather than a new budget head. India's total fertilizer subsidy bill was about ₹2.55 lakh crore in FY 2022-23 (urea subsidy + NBS combined), and the Government of India has signalled that the central goal is to bring this bill down by encouraging balanced and alternate nutrients. Rather than launching a separate outlay, the Cabinet approved a mechanism that returns half of any subsidy a state stops drawing down — because it now consumes less subsidised urea / DAP / MOP / NPK — back to that state as a grant. This makes PM-PRANAM self-financing from urea-subsidy + NBS savings, and aligns state incentives with the centre's nutrient-management goal.

How do farmers and panchayats actually benefit?

Farmers do not apply to PM-PRANAM directly; the scheme operates at the state level. The benefit reaches farmers in two ways. First, through asset creation funded by the 70% capital share of the state's grant — village-level bio-input resource centres, soil-testing labs, FOM / PROM aggregation infrastructure, demonstration plots and manure-management units. Second, through the 30% reward share, which states deploy to recognise and incentivise farmers, panchayats, FPOs and SHGs that have measurably reduced chemical-fertilizer use — typically through rewards for natural-farming clusters, organic FPO clusters, model villages that have shifted to nano-urea or nano-DAP, and panchayats that maintain bio-input centres. Indirectly, every farmer benefits from the wider availability and price-stability of nano-urea, nano-DAP, Urea Gold, FOM, PROM and city compost that the package underwrites.

Where can I find the official PM-PRANAM guidelines and updates?

The authoritative sources are the Department of Fertilizers website at fert.nic.in, the Press Information Bureau (PIB) press releases dated 28 June 2023 (Cabinet approval of the nutrient-management package including PM-PRANAM) and the subsequent Department-of-Fertilizers operational circulars and Office Memoranda. The Integrated Fertilizer Management System (iFMS) and the DBT-Fertilizers portal host the underlying subsidy-sales data that feeds the state-level reduction assessment. The Ministry of Agriculture & Farmers Welfare portal at agriwelfare.gov.in and naturalfarming.dac.gov.in are the relevant references for the convergent NMNF, PKVY and Soil Health Card programmes that drive on-the-ground fertilizer reduction.

PM-PRANAM Guide — Programme for Restoration, Awareness, Generation, Nourishment and Amelioration of Mother Earth: 50% Subsidy-Saving Grant to States for Cutting Chemical Fertilizer Use

PM-PRANAM — the Programme for Restoration, Awareness, Generation, Nourishment and Amelioration of Mother Earth— is the Government of India's state-incentive scheme for cutting chemical fertilizer use. It was approved by the Union Cabinet on 28 June 2023 as part of a larger ₹3.68 lakh crore nutrient-management package announced by the Department of Fertilizers under the Ministry of Chemicals and Fertilizers. PM-PRANAM has no separate budget of its own; it is financed entirely out of the savings generated under the existing urea subsidy and the Nutrient Based Subsidy (NBS) when states consume less chemical fertilizer. Of the saving attributable to a state, 50% is returned to that state as a grant — and within the grant, 70% funds asset creation for sustainable agriculture at the village / block / district level, while 30% rewards farmers, panchayats, FPOs and SHGs that delivered the reduction. For the wider farmer-welfare portfolio see our India government schemes for farmers reference; PM-PRANAM stacks naturally with NMNF, PKVY and the Soil Health Card scheme.

At a glance

Scheme type: state-incentive grant scheme of the Department of Fertilizers, funded from urea-subsidy + NBS savings (no separate budget head).
Approved: 28 June 2023 by the Union Cabinet, as part of the ₹3.68 lakh crore nutrient-management package.
Administering ministry: Department of Fertilizers (DoF), Ministry of Chemicals and Fertilizers, Government of India.
Grant mechanism: 50% of the subsidy saving relative to the state's three-year average chemical-fertilizer consumption is returned to the state.
Use-of-grant split: 70% for asset creation (bio-input centres, manure-management infrastructure, soil-testing labs, demonstration units) at village / block / district level, and 30% to reward farmers, panchayats, FPOs and SHGs.
Baseline: state's last three-year average consumption of urea, DAP, MOP and NPK complexes, tracked via the Integrated Fertilizer Management System (iFMS) and DBT-Fertilizers retailer PoS data.
Convergent alternate nutrients: nano-urea (₹240 / 500 ml, IFFCO June 2021), nano-DAP (₹600 / 500 ml, IFFCO April 2023), Sulphur-Coated Urea / “Urea Gold” (PM launch July 2023), neem-coated urea, bio-fertilisers, FOM, PROM and city compost (MDA of ₹1,500 / tonne to manufacturers).
Portals: fert.nic.in, pib.gov.in.

Why PM-PRANAM was launched

India's fertilizer subsidy bill reached about ₹2.55 lakh crore in FY 2022-23 — urea subsidy plus NBS combined — and has been one of the largest items of central agricultural expenditure for several years. Behind that bill sits a long-standing pattern of over-application of urea relative to phosphatic and potassic nutrients, soil-organic-carbon decline, and stagnating nutrient-use efficiency. The Union Cabinet approval of 28 June 2023 packaged PM-PRANAM alongside a continuation of urea subsidy for farmers at the existing MRP, a continuation of the NBS and the Market Development Assistance (MDA) of ₹1,500 per tonne to manufacturers of FOM (Fermented Organic Manure), PROM(Phosphate-Rich Organic Manure) and city compost. PM-PRANAM's specific role is to make balanced / alternate nutrients the financially better choice for state governments — by sharing 50% of any urea / NBS saving a state generates back to that state as an untied investment in sustainable agriculture.

How the incentive mechanism works

PM-PRANAM is a savings-recycling scheme rather than a new outlay. The mechanism has four steps:

Baseline: each state / UT's consumption of urea, DAP, MOP and NPK complexes is averaged over the last three years. Consumption is tracked at the retailer PoS level under DBT-Fertilizers and aggregated through the Integrated Fertilizer Management System (iFMS).
Assessment: in the assessment year, actual chemical-fertilizer consumption is compared to the three-year baseline. The reduction in subsidy outlay that the centre would otherwise have paid (urea subsidy + NBS) on the fertilizers not consumed is the subsidy saving attributable to that state.
Grant: 50% of the subsidy saving is returned to the state as a PM-PRANAM grant. Specific state-level grant amounts are not pre-announced; they vary by state and assessment year based on actual subsidy savings — “as notified” in the relevant Department of Fertilizers Office Memorandum.
Use-of-grant: 70% goes to asset creation for sustainable agriculture and alternate-fertilizer adoption at village / block / district level — bio-input centres, manure-management infrastructure, soil-testing labs, demonstration units, FOM / PROM aggregation. 30% is used to reward farmers, panchayats, FPOs and SHGs that have measurably reduced chemical-fertilizer use.

What counts as “reduction”

Reduction is measured strictly at the state / UT level against the three-year average chemical-fertilizer consumption baseline, with urea, DAP, MOP and NPK complexes all in scope. Adoption of nano-urea, nano-DAP, Sulphur-Coated Urea (Urea Gold), bio-fertilisers, organic fertilisers (FOM, PROM) and city compost is the operational route to delivering the underlying conventional-fertilizer reduction. Performance is read off the iFMS / DBT-Fertilizers PoS data — the same retailer-level data that already drives subsidy payouts — so the assessment is not dependent on a new survey instrument. State governments converge their natural-farming, organic and balanced-nutrient programmes around this single performance metric.

Alternate nutrients: the basket PM-PRANAM helps scale

Nano-urea: commercial launch by IFFCO in June 2021 at ₹240 per 500 ml bottle, designed so that one bottle substitutes approximately one 45 kg bag of conventional urea, with significantly lower per-acre nitrogen application and reduced volatilisation loss. See our Nano Urea & Nano DAP guide for the chemistry, dosage, drone-spray channel and honest limits.
Nano-DAP: commercial launch by IFFCO in April 2023 at ₹600 per 500 ml bottle, intended to substitute conventional 50 kg DAP bags with comparable phosphorus delivery.
Sulphur-Coated Urea (“Urea Gold”): launched by the Prime Minister in July 2023; the sulphur coating delivers an essential secondary nutrient and slows nitrogen release, improving nutrient-use efficiency.
Neem-coated urea: mandatory across India since 2015, slows the nitrification rate of urea and curbs diversion to non-agricultural use.
Bio-fertilisers (Rhizobium, Azotobacter, Azospirillum, PSB, KSB) — supplied through the NMNF Bio-Input Resource Centre network and PKVY clusters.
FOM, PROM and city compost: manufacturers receive a Market Development Assistance of ₹1,500 per tonne from the Department of Fertilizers, keeping farm-gate prices competitive. As a package, this basket can reduce conventional urea / DAP demand by approximately 25% per acre, making the underlying subsidy saving — and therefore the PM-PRANAM grant — meaningful at the state level.

Convergence with NMNF, PKVY, Soil Health Card, MOVCDNER and more

PM-PRANAM is a financing-incentive layer; the on-the-ground fertilizer reduction that earns a state the grant is delivered by the convergent farmer-facing schemes:

National Mission on Natural Farming (NMNF): strictly chemical-free, cattle-based clusters — every NMNF hectare reduces a state's urea / DAP demand and counts toward the three-year baseline.
Paramparagat Krishi Vikas Yojana (PKVY): organic PGS-India certified clusters under DA&FW; a given hectare is enrolled under either PKVY or NMNF, never both.
Soil Health Card scheme: baseline soil-test data and crop-wise nutrient recommendations that let states move away from blanket fertilizer application.
MOVCDNER: Mission Organic Value Chain Development for North-East Region — drives organic value-chain conversion across the eight NE states with NPOP certification.
Per Drop More Crop (PMKSY-PDMC): drip / sprinkler micro-irrigation cuts fertigation waste and improves nutrient-use efficiency.
PM-KUSUM: solar pumps reduce the diesel / electricity bills that often subsidise over-irrigation and over-application.
NMEO-Oilseeds: cluster-level balanced-nutrient packages tied to Soil Health Card recommendations for the oilseed belt.

How states and farmers actually benefit

PM-PRANAM operates state-side; farmers do not apply to it directly. The 70% asset-creation share of the state grant funds village-level bio-input centres, soil-testing labs, FOM / PROM aggregation infrastructure, demonstration plots and manure-management units that farmers can access in their block. The 30% reward share is deployed by states to recognise and incentivise the farmers, panchayats, FPOs and SHGsthat delivered the reduction — typically natural- farming clusters, organic FPOs, model villages that have switched to nano-urea or nano-DAP, and panchayats that maintain a bio-input resource centre. The Integrated Fertilizer Management System (iFMS) handle means a farmer's individual switch to nano-urea or away from blanket urea application directly registers in the state's subsidy-saving line.

Implementation handle — the Integrated Fertilizer Management System (iFMS)

PM-PRANAM is linked operationally to the Integrated Fertilizer Management System (iFMS) of the Department of Fertilizers. iFMS is the data backbone of the DBT-Fertilizers regime — retailer-level PoS sales of subsidised urea, DAP, MOP and NPK complexes are recorded against Aadhaar-authenticated buyer records, and the central subsidy is paid to companies only on confirmed retailer sales. Because iFMS already records subsidy-bearing sales at the SKU / retailer level, the three-year-average baseline and assessment-year consumption for each state can be derived directly from this data without a new survey instrument. State agriculture departments are the on-the-ground execution partner for the grant-funded asset creation and reward components.

Sources

Press Information Bureau (PIB) — Cabinet press release dated 28 June 2023 approving the ₹3.68 lakh crore nutrient-management package and PM-PRANAM; subsequent PIB releases on Urea Gold (July 2023) and nano-DAP (April 2023).
fert.nic.in — Department of Fertilizers, Ministry of Chemicals and Fertilizers: PM-PRANAM operational circulars, the DBT-Fertilizers regime and the Integrated Fertilizer Management System (iFMS).
agriwelfare.gov.in — Department of Agriculture & Farmers Welfare: the convergent NMNF / PKVY / Soil Health Card programmes that deliver the on-the-ground reduction.
naturalfarming.dac.gov.in — NMNF portal for cluster enrolment, Bio-Input Resource Centres and Krishi Sakhi extension.

Frequently asked questions

What is PM-PRANAM and which ministry runs it?: PM-PRANAM stands for Programme for Restoration, Awareness, Generation, Nourishment and Amelioration of Mother Earth. It is a Government of India scheme administered by the Department of Fertilizers under the Ministry of Chemicals and Fertilizers, approved by the Union Cabinet on 28 June 2023 as part of a larger ₹3.68 lakh crore nutrient-management package for farmers. PM-PRANAM is the state-incentive arm of that package — it does not carry a separate budget of its own; instead it is funded out of the savings generated under existing fertilizer subsidy heads (urea subsidy and the Nutrient Based Subsidy or NBS) when states reduce chemical fertilizer consumption.
How does the PM-PRANAM incentive mechanism work?: PM-PRANAM rewards states and Union Territories that bring down their chemical fertilizer consumption — urea, DAP, MOP and NPK complexes — against their last three-year average baseline. The reduction in the central subsidy outlay for that state (i.e. the subsidy that would otherwise have been paid on the fertilizers no longer consumed) is treated as the subsidy saving. Fifty per cent of that saving is given back to the state as a grant under PM-PRANAM. Within the grant, 70% is earmarked for asset creation related to sustainable agriculture and alternate fertilizer adoption at the village, block and district level — bio-input centres, manure-management infrastructure, soil-testing labs and demonstration units — and 30% is used to reward farmers, panchayats, FPOs and SHGs that have actually reduced chemical-fertilizer use.
What counts as 'reduction' in chemical fertilizer use under PM-PRANAM?: Reduction is measured at the state / UT level against the state's three-year average chemical-fertilizer consumption (urea, DAP, MOP and NPK complexes), with the assessment year compared to that rolling baseline. Performance is tracked through the Integrated Fertilizer Management System (iFMS) of the Department of Fertilizers, which already records subsidy-bearing sales at the retailer level via PoS devices under the Direct Benefit Transfer (DBT) mechanism for fertilizers. Adoption of alternate nutrient sources — nano-urea, nano-DAP, Sulphur-Coated Urea (Urea Gold), bio-fertilisers, organic fertilisers, city compost, FOM and PROM — is what allows a state to deliver the underlying conventional-fertilizer reduction. State-level grant amounts are not pre-announced; they vary by state and assessment year based on actual subsidy savings.
What alternate nutrients does PM-PRANAM encourage?: PM-PRANAM promotes the basket of balanced and alternate nutrients introduced alongside it under the wider nutrient-management package: nano-urea (IFFCO commercial launch in June 2021 at ₹240 per 500 ml bottle, one bottle designed to substitute approximately one 45 kg bag of conventional urea), nano-DAP (IFFCO commercial launch in April 2023 at ₹600 per 500 ml bottle), Sulphur-Coated Urea branded 'Urea Gold' launched by the Prime Minister in July 2023, neem-coated urea, bio-fertilisers, organic fertilisers including Fermented Organic Manure (FOM) and Phosphate-Rich Organic Manure (PROM), and city compost. The Department of Fertilizers also pays a Market Development Assistance (MDA) of ₹1,500 per tonne to manufacturers of FOM, PROM and city compost to keep these alternate nutrients price-competitive at the farm gate.
How does PM-PRANAM converge with NMNF, PKVY, Soil Health Card and MOVCDNER?: PM-PRANAM is the financing-incentive layer; the cluster-level chemical-fertilizer reductions that earn a state the grant are produced on the ground by other schemes. Hectares under the National Mission on Natural Farming (NMNF) are strictly cattle-based and chemical-free — every NMNF hectare reduces a state's conventional urea / DAP demand and counts toward the PM-PRANAM baseline. PKVY organic clusters certified under PGS-India play the same role. The Soil Health Card scheme supplies the soil-test baseline and crop-wise nutrient recommendations that let states avoid blanket fertilizer application. MOVCDNER drives organic value-chain conversion in the eight North-Eastern states. Per Drop More Crop (PMKSY-PDMC) reduces fertigation waste, and PM-KUSUM solar pumps cut diesel + electricity bills that would otherwise subsidise over-application.
What is the funding source — and why does PM-PRANAM have no separate budget?: PM-PRANAM is deliberately designed as a savings-recycling scheme rather than a new budget head. India's total fertilizer subsidy bill was about ₹2.55 lakh crore in FY 2022-23 (urea subsidy + NBS combined), and the Government of India has signalled that the central goal is to bring this bill down by encouraging balanced and alternate nutrients. Rather than launching a separate outlay, the Cabinet approved a mechanism that returns half of any subsidy a state stops drawing down — because it now consumes less subsidised urea / DAP / MOP / NPK — back to that state as a grant. This makes PM-PRANAM self-financing from urea-subsidy + NBS savings, and aligns state incentives with the centre's nutrient-management goal.
How do farmers and panchayats actually benefit?: Farmers do not apply to PM-PRANAM directly; the scheme operates at the state level. The benefit reaches farmers in two ways. First, through asset creation funded by the 70% capital share of the state's grant — village-level bio-input resource centres, soil-testing labs, FOM / PROM aggregation infrastructure, demonstration plots and manure-management units. Second, through the 30% reward share, which states deploy to recognise and incentivise farmers, panchayats, FPOs and SHGs that have measurably reduced chemical-fertilizer use — typically through rewards for natural-farming clusters, organic FPO clusters, model villages that have shifted to nano-urea or nano-DAP, and panchayats that maintain bio-input centres. Indirectly, every farmer benefits from the wider availability and price-stability of nano-urea, nano-DAP, Urea Gold, FOM, PROM and city compost that the package underwrites.
Where can I find the official PM-PRANAM guidelines and updates?: The authoritative sources are the Department of Fertilizers website at fert.nic.in, the Press Information Bureau (PIB) press releases dated 28 June 2023 (Cabinet approval of the nutrient-management package including PM-PRANAM) and the subsequent Department-of-Fertilizers operational circulars and Office Memoranda. The Integrated Fertilizer Management System (iFMS) and the DBT-Fertilizers portal host the underlying subsidy-sales data that feeds the state-level reduction assessment. The Ministry of Agriculture & Farmers Welfare portal at agriwelfare.gov.in and naturalfarming.dac.gov.in are the relevant references for the convergent NMNF, PKVY and Soil Health Card programmes that drive on-the-ground fertilizer reduction.

PM-PRANAM design parameters above — the 50% subsidy-saving grant, the 70 / 30 asset-versus-reward split, the three-year baseline and the iFMS implementation handle — summarise the publicly available Cabinet decision of 28 June 2023 and the Department of Fertilizers communications on fert.nic.in and pib.gov.in. State-level grant amounts vary by state and assessment year and are notified through Department of Fertilizers Office Memoranda; beneficiaries and state nodal departments should verify current terms before drawing assistance.