A field experiment was initiated at the Central Soil Salinity Research Institute, Karnal, India between 1994 and 1998 involving use of NPK fertilizers alone and in combination with green manure (Sesbania bispinosa) or farmyard manure (FYM) in a rice–wheat cropping sequence. An attempt was made to evaluate the effect of the substitution of inorganic fertilizers with organic manures on yields of grain and nutrients, economy and soil fertility during 1997–98 and 1998–99. Application of NPK and its combination with green manuring and FYM increased the rice yield significantly. Applying inorganic fertilizers resulted in similar nitrogen use efficiency (NUE) in rice as compared with organic manures along with inorganic fertilizers, but NUE was increased in wheat by the residual effect of organic manures along with inorganic fertilizers. The responses of rice to the application of the full recommended amount of inorganic fertilizers (120 kg N, 26 kg P and 42 kg K/ha) and its combined use with green manure or 10 t/ha FYM and 150% recommended amount (180 kg N, 39 kg P and 63 kg K/ha) were 2·98, 4·27, 4·10 and 3·54 t/ha, respectively. Further, with green manure or 10 t FYM/ha in combination with 50% recommended amount, the mean rice yield (5·8 t/ha) was similar to the yield (5·5 t/ha) obtained from the 100% NPK recommended treatment. Application of green manure or 10 t FYM/ha thus saved 60 kg N and 13 kg P/ha inorganic fertilizer in rice. The residual effect of green manure or FYM plus the full recommended fertilizer amount (120 kg N, 26 kg P and 42 kg K/ha) was significantly greater than that of the full recommended amount of fertilizer. Addition of green manure or FYM resulted in higher removal in crops, increase of soil N, P, K and organic C, and reduced soil pH. Application of the full recommended amount of fertilizer only maintained the N, P and K status in soil. Higher profit was obtained when inorganic fertilizer was combined with organic manures.