Fertilizer subsidy hike extended for Rabi crop season

According to an official statement, the Cabinet Committee on Economic Affairs has approved the move. The decision comes at a time when global commodity prices are rising, increasing manufacturing costs, including those of fertilisers. India is dependent on import of Phosphatic Fertilizers.

The subsidy helps ensure that fertilizers remain affordable for farmers.

According to the statement, the increase in international prices of Diammonium Phosphate (DAP) has been absorbed by the Central Government. “The central government has decided to increase the subsidy ₹438 per bag of DAP as a special one-time package so that farmers can get DAP at the same price.”

For the three most consumed nitrogen, phosphorus and potassium (NPK) grades of fertilizers, the increase in global prices has been absorbed by increasing subsidies. ₹100 per bag, again as a special lump sum package.

The government also brought potash derived from molasses for the first time under the Nutrient Based Subsidy Scheme to promote manufacturing as a by-product by sugar mills. This is expected to reduce India’s dependence on 100% import of more than 42 lakh tonnes of mineral based potash i.e. Murate of Potash, which is worth around Rs. 7,160 crore annually.

This decision will not only help in increasing the income of sugarcane farmers and sugar mills, but will also offer ₹73 subsidy is being sold per 50 kg bag ₹600-800 to farmers by fertilizer companies. Center is likely to spend ₹156 crore per year as subsidy on potash from molasses and save foreign exchange ₹562 crore, the statement said.

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