CAG to audit urea subsidy, distribution in 169 districts

India plans to spend ₹2.17 lakh crore on fertiliser subsidies this fiscal year, with urea accounting for the largest share

New Delhi: The Comptroller and Auditor General (CAG) will undertake a comprehensive study of urea subsidy and distribution across districts where consumption is above the national average, officials said.

The exercise is part of a planned two-year audit of the country's fertiliser subsidy ecosystem, prompted by high expenditure and concerns over leakages and pilferage. India plans to spend ₹2.17 lakh crore on fertiliser subsidies this fiscal year, with urea accounting for the largest share.


According to official estimates, average urea consumption across the country stands at 180 kg per hectare of gross cropped area. "There are 149 districts where urea consumption is above the national average," a senior official told ET, adding that 37 districts in Uttar Pradesh, 16 each in Tamil Nadu and Bihar, and 14 each in Punjab and Gujarat are under scrutiny. The role of state governments in enforcing controls and forecasting demand will also be covered by the audit.

"Another 20 districts have been recommended by the Centre for being examined, taking the total number of audited districts to 169," the official said, adding that crop yields in these districts will be correlated with urea consumption. India has about 802 districts. The audit follows high expenditure on urea subsidies. Officials said this was a concern because agricultural urea is universally subsidised, without caps based on farm size or wealth, while substantial volumes have historically been diverted to non-agricultural sectors. Technical Grade Urea (TGU) is a key commercial raw material used in resins, glues, plywood manufacturing, crockery production, cattle feed and commercial explosives.

The last such audit was conducted in 2011. "A lot has changed since with direct benefit transfer of subsidy and the integrated fertiliser management system (IFMS) being introduced... the audit for 2026-27 is already underway," a second official said. For this fiscal year, the CAG is conducting an all-India performance audit on fertiliser subsidy, focusing on demand assessment and the efficiency of the urea subsidy framework. The exercise will cover the assessment of fertiliser requirements, scrutiny of demand, allocation, supply planning, and initiatives to reduce urea consumption and promote sustainable fertiliser use.

The audit will examine the reliability and scientific basis of demand assessment, supply efficiency, prevention of diversion, distribution monitoring, the performance and effectiveness of subsidy rationalisation initiatives, and the alignment of fertiliser regimes with environmental sustainability. A third theme this year covers the cost of urea production and subsidies, energy norms, financial and environmental impact, fertiliser security, import dependence and self-sufficiency. The CAG has selected 13 of the country's 36 urea plants for detailed scrutiny.

For the next fiscal year (2027-28), urea imports will be a focus of the audit. The exercise will examine import planning, procurement, associated arrangements and the effectiveness of measures to ensure timely availability and optimise import dependence. The movement of urea, transportation arrangements, freight subsidies and associated monitoring and control systems will form another theme.

The CAG's audit plan also includes an examination of the regulatory framework governing fertiliser quality, standards, licensing, monitoring and enforcement of provisions under the Fertiliser Control Order.