Fertilizer subsidies may increase up to Rs 2.5 lakh crore, Govt to provide at old rates

fertiliser subsidy to rose by 2.5 lakh

New Delhi. Fertilizer subsidy may reach 2.5 lakh crore during the current financial year due to costly imports and an increase in domestic production costs. It may rise by 55 percent as compared to last year. According to highly placed sources in the government, the government is continuously in talks with the major producing countries of the global market to continue the supply of fertilizers. An immediate and long-term strategy for fertilizer availability has been started.

Read more: Soaring LNG prices likely to drive up India’s Rs 1 tn fertiliser subsidy

Efforts intensified for the supply of fertilizer

According to sources, Union Chemicals and Fertilizers Minister Mansukh Mandaviya will soon visit fertilizer-producing countries like Saudi Arabia, Oman and Morocco. For the supply of fertilizers from these countries, the deals for immediate and long-term supply will be discussed. Fertilizer consumption is 15 to 20 percent higher in Rabi season than in Kharif season. For this also the international market is being explored.

No increase in the retail price of urea

Government sources say that the government will not allow any increase in the retail price of urea. Whereas there will be no change in the prices of non-urea fertilizers. The Union Cabinet on Wednesday approved a subsidy of Rs 60,939.23 crore for phosphatic and potassium fertilizers for six months. This does not include a subsidy on urea.

Subsidy may touch 2.5 lakh crore level

Government sources say that in the current financial year 2022-23, the fertilizer subsidy may touch the level of 2.5 lakh crores. Last year in 2021-22, the fertilizer subsidy was Rs 1.62 lakh crore. Whereas in the year 2013-14, it was 71 thousand crores.

Price of urea rises to $ 930 per ton in a year

According to ministry sources, exports have almost come to a standstill due to the reduced production of China, which supplies 40 to 45 percent of phosphatic fertilizers to India. International fertilizer prices have risen sharply due to the Russia-Ukraine war and sanctions imposed on Iran and Russia. Apart from this, the transportation cost has also increased.

Read more: Ukrainian crisis to push up fertiliser prices; govt subsidies

The price of urea has gone up from $380 to $930 a tonne in a year, while that of DAP has gone up from $555 to $924 a tonne. In comparison, urea is being provided to farmers in India at just Rs 266 per bag (45 kg) and DAP at Rs 1350 per bag (50 kg) by subsidizing farmers. Provision has been made for subsidy of Rs 3700 on urea and Rs 2501 per bag on DAP.