With the kharif sowing season approaching, the Cabinet Committee on Economic Affairs (CCEA) has approved the proposal to hike the subsidy granted on phosphorus and potassium-based fertilisers by 140 per cent. Albeit a one-time measure adopted for providing relief to farmers amid the Covid-19 pandemic, the additional subsidy burden accompanying the decision has been pegged at around Rs. 14,775 crore.
Unlike urea-based fertilizers, whose prices are regulated by the Centre, non-urea fertiliser prices are decontrolled, with the government fixing nutrient-based subsidy rates each year.
So far, a 50 kg bag of di-ammonium phosphate (DAP) was sold at Rs. 1,200, which includes a subsidy of around Rs. 500.
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Owing to a bull run in the global markets, the prices of imported raw materials and finished fertiliser have witnessed a surge.
Notably, in April 2021, a number of Indian fertiliser had hiked DAP prices to Rs. 1,900 per bag, a decision that was opposed unanimously by farmers’ groups. Pointing at the Rs. 700 a kg hike, farmer groups across the country had argued that the price increase, coupled with the rise in diesel and petrol prices, shall push the input cost of kharif crops.
Following this, Prime Minister (PM) Narendra Modi had announced that the subsidy shall be increased to Rs. 1,200 a bag. This decision was okayed during a high-level meeting chaired by Prime Minister (PM) Narendra Modi, on 19 May 2021.
This is a one-time measure adopted as a relief package to reduce the hardships faced by farmers amid the ongoing pandemic, the official communiqué read.
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Once the international prices go down in a few months, the Indian government may review the situation accordingly and decide the then subsidy rates.
