A field experiment was conducted to study the effect of nutrient management practices on the performance of soybeansafflower sequence in Vertisols. The safflower equivalent yield (2418 kg/ha -1 ); gross returns (Rs. 53196/ha -1 ); net returns (Rs 33734/ha -1 ) and B:C ratio (2.8) were significantly superior either with the application of NPK to the system + 5 t FYM/ ha to safflower; or NPK to the system + soybean residues to safflower; or NPK to the system + both crop residues. Similar trend was also observed with respect to soil health indicators viz., soil respiration (108 g C/g soil/10 days), microbial biomass C (284 g C/g soil), microbial biomass N (41.9 g N/g soil), mineral N (13.8 g N/g soil) and net N mineralization (5.4 g N/g soil/ 10 days). Significant improvement was observed in terms of PGPR and Trichoderma sp were found when NPK + crop residues were applied to the system.