Azolla is used as a biofertilizer as it possesses

The correct option is (d) cyanobacteria.

Azolla is a genus of small, free-floating aquatic ferns commonly found in temperate and tropical regions. It is highly valued as a biofertilizer, particularly in rice paddy fields, due to its ability to fix atmospheric nitrogen.

This nitrogen-fixing capability is not an inherent property of the fern itself, but rather the result of a symbiotic relationship. Azolla houses a nitrogen-fixing blue-green alga (cyanobacterium) known as Anabaena azollae within specialized cavities in its leaves.

In this mutualistic association:
1. The cyanobacteria fix atmospheric nitrogen into a form (ammonia) that the Azolla plant can readily absorb and use for its growth.
2. In return, the Azolla plant provides a protected physical environment and photosynthetic nutrients to the cyanobacteria.

When Azolla is incorporated into the soil, it decomposes rapidly, releasing the fixed nitrogen and other nutrients, thereby enriching the soil fertility and acting as an excellent organic biofertilizer. Other options like Rhizobium (which forms symbiosis with legumes), mycorrhiza (a symbiotic fungus), and humus (decomposed organic matter) are not the primary biological partners residing within Azolla that define its biofertilizer properties.