The green revolution brought impressive gains in food production but with insufficient concern for sustainability. In India the availability and affordability of fossil fuel based chemical fertilizers at the farm level have been ensured only through imports and subsidies. Dependence on chemical fertilizers for future agricultural growth would mean further loss in soil quality, possibilities of water contamination and unsustainable burden on the fiscal system. The Government of India has been trying to promote an improved practice involving use of bio- fertilizers along with fertilizers. These inputs have multiple beneficial impacts on the soil and can be relatively cheap and convenient for use. Consistent with current outlook, the government aims not only to encourage their use in agriculture but also to promote private initiative and commercial viability of production. This paper analyses available industry side data to find only a limited extent of success till date. There has been no accelerated growth in distribution with time, inadequate spatial diffusion and despite entry of small private units into the industry there is no clear indication of the success of privatization. The paper however argues that considering the social benefits promised the government has ample grounds to intervene to set up an effective market for the new product while encouraging private players. But the policy and the instruments of intervention need to be designed with care.
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