Fertilizer subsidies, an instrument used by the government for improving fertilizer consumption in India, is criticized in the recent years for its unintended negative effects. Aadhar enabled Fertilizer Distribution System is the recent policy implemented by the central government to control rising fiscal burden due to fertilizers, reduce diversion of subsidized fertilizers and improve soil nutrient balance. It was initially implemented on a pilot basis in selected districts of the country in March, 2016 and later rolled out nationally. This paper attempts to study the fertilizer subsidies in India and its distribution, implementation of AeFDS pilot and its impact on sale of fertiliz‘ers. The study uses primary data collected from the farmers and retailers of Karnal district of Haryana and the secondary data collected from various published sources. The industry was identified to be the real beneficiary of subsidies using import parity price method. The perception of retailers and farmers on AeFDS in general were in support of the programme. However. the AeFDS had no significant effect on the urea sales.
