With reference to chemical fertilizers in India, consider the following statements: 1) At present, the retail price of chemical fertilizers is market-driven and not administered by the Government. 2) Ammonia, which is an input of urea, is produced from natural gas. 3) Sulphur, which is a raw material for phosphoric acid fertilizer, is a by-product of oil refineries. Which of the statements given above is/are correct?

The correct answer is B, because statements 2 and 3 are true and statement 1 is not.

• Statement 1 is wrong. Urea is the key exception. Its retail price (MRP) is still fixed by the Government, and companies are compensated through subsidy to hold that price. Market-driven pricing applies to Nutrient Based Subsidy (NBS) fertilizers such as DAP and complexes, where the subsidy per nutrient is fixed but the MRP is not. So the claim that all chemical fertilizers are market-priced is incorrect.
• Statement 2 is right. Ammonia is synthesised by the Haber-Bosch process, using hydrogen from natural gas (or naphtha in some plants) combined with nitrogen. Urea is then made from ammonia and carbon dioxide. This is why India's urea economy depends on gas supply and LNG imports.
• Statement 3 is right. Sulphur is recovered as a by-product when crude and gas are desulphurised in refineries and gas processing plants. It is used to make sulphuric acid, which is needed to produce phosphoric acid and DAP. India imports much of its sulphur and phosphate rock, which links this to import dependence.

Core concept: the fertilizer value chain (gas to ammonia to urea; refinery sulphur to phosphoric acid) and the difference between administered and decontrolled pricing. Mains angle: GS-3 on fertilizer subsidy reform, NBS policy and dependence on natural gas imports.

Trap: assuming that because NBS fertilizers are decontrolled, all fertilizers are market-priced. Urea remains administered.