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NEW DELHI: In a move aimed at helping farmers, the Centre on Thursday extended the subsidy hike on phosphatic and potassic fertilizers, undertaken in May for the Kharif season, to the upcoming Rabi sowing season which will begin in November and end in March.

As per an official statement, the Cabinet Committee on Economic Affairs has approved the move. The decision comes at a time when global commodity prices have been on an upswing, pushing up manufacturing cost, including that of fertilizers. India relies on imports for phosphatic fertilizers. 

Subsidy helps in ensuring fertilizers remain affordable for farmers.

As per the statement, the rise in international prices of diammonium phosphate (DAP) has been absorbed by the Union government. “The Union government has decided to increase the subsidy by 438 per bag of DAP as a special one-time package so that farmers can get DAP at the same price," said the statement.

For the three most consumed nitrogen, phosphorous and potassium (NPK) grades of fertilizers, the rise in global prices have been absorbed by increasing subsidy by 100 per bag, again as a special one-time package.

The government also brought potash derived from molasses under the nutrient based subsidy scheme for the first time to boost manufacturing by sugar mills as a by-product. This is expected to reduce India’s dependence on 100% import of more than 42 lakh tonne of mineral based potash i.e. muriate of potash which costs around Rs. 7,160 crore annually.

This decision will not only help boost income of cane farmers and sugar mills but also offer 73 subsidy per 50 kilogram bag being sold at the rate 600-800 by fertilizer companies to farmers. Centre is likely to spend 156 crore a year as subsidy on potash from molasses and save a foreign exchange of 562 crores, the statement said.

Unlike the subsidy on a host of other utilities and services, fertilizer subsidy is given through manufacturers rather than directly to the consumer, but it is based on actual purchase data captured at fertilizer retail outlets using point of sale machines. This is due to complexities in the farm sector around land ownership and tenancy.

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