Home / News / India /  Fertiliser subsidy expected to rise by 55% to record 2.5 lakh cr in FY23
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India's fertiliser subsidy is expected to rise by 55% to 2.5 lakh crore for the financial year FY23 on the back of additional funds to make up for the increase in cost from higher import prices.

Sources told PTI that the government will ensure that there is no shortage of fertilisers in the country during the Kharif (summer-sown) and rabi (winter-sown) season and it is already in talks with major global producers to import key soil nutrients.

They added that Union Chemicals and Fertilisers Minister Mansukh Mandaviya is likely to visit many countries, including Saudi Arabia, Oman, and Morocco, soon to secure imports on both short and long-term basis.

The government is working to ensure no shortage of fertilisers across the country.

As per sources, the government will not increase retail prices of urea and also provide adequate subsidies to ensure that the maximum retail prices of non-urea fertilisers remain at the present level.

Notably, fertiliser consumption in the rabi season has surged 10-15% compared to summer crops.

Further, these sources said that the government has taken the historic decision on the fertiliser front that it will not pass on the burden to farmers, the sources said, adding that due to higher subsidy, selling price of both urea and DAP (Di-Ammonium Phosphate) is significantly lower in India compared to countries, like the US, China, and Brazil.

A top government functionary said to the above-mentioned news agency that the subsidy bill for 2022-23 could go up to 2.25-2.5 lakh crore. Due to the COVID pandemic, fertiliser production, imports, and transportation have been disturbed globally, the ripple effects of which are being seen across countries including India.

In FY22, the total fertilisers subsidy stood at 1,62,132 crore. It has made a consistent rise from 71,280 crore in the financial year 2013-14.

On Wednesday, the Union Cabinet approved the proposal for Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilizers for Kharif Season - 2022.

The Kharif season has begun on April 1 and will be there till September 30, 2022.

For the Kharif season, the Cabinet has approved a subsidy of 60,939.23 crore including support for indigenous fertilizer (SSP) through freight subsidy and additional support for indigenous manufacturing and imports of DAP.

"The increase in the international prices of Di-ammonium phosphate (DAP) and its raw materials have been primarily absorbed by the Union Government," the cabinet said yesterday.

It added that the government has decided to provide a subsidy of 2501 per bag on DAP instead of the existing subsidy of 1650 per bag which is a 50% increase over the last year’s subsidy rates. The increase in the prices of DAP & its raw material is in the range of approx. 80%. It will help farmers to receive notified P&K fertilizers at subsidized, affordable, and reasonable rates and support the agriculture sector.

Also, sources said that on account of the pandemic, the ongoing war between Russia and Ukraine, and global sanctions on Iran and Russia, the international fertiliser prices have shot up significantly. Also, the freight charges have gone up by four times.

Explaining further, the sources pointed out that the urea prices have increased to $ 930 per tonne in April 2022 from $380 per tonne in the year-ago period. Similarly, DAP prices have gone up to $924 per tonne from $555 per tonne.

Also, they outlined that in the country, farmers buy the two key fertilisers at highly subsidised rates. Urea is available at 266 for a 45 kg bag while DAP is sold at 1,350 for a 50 kg bag. At present, the subsidy on urea is around 3,700 per bag and 2,501 on DAP.

Currently, the domestic annual production of urea is about 260 lakh tonnes against the demand of 325 lakh tonnes - meanwhile, the gap is filled through imports. (With Inputs From The Agency).

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