Fertilizer subsidy may go up to Rs 2.15 lakh crore due to increase in prices

The fertilizer subsidy may exceed the Budget provisions by Rs 1.1 lakh crore in the current financial year. The Budget had made a provision of Rs 1.05 lakh crore for fertilizer subsidy. Thus, the subsidy is estimated to reach Rs 2.15 lakh crore in FY23. The fertilizer subsidy for FY22 was Rs 1,62,132 crore.

Fertilizer subsidy may go up to Rs 2.15 lakh crore due to increase in prices

Finance Minister Nirmala Sitharaman has said that fertilizer subsidy may exceed the Budget provisions by Rs 1.1 lakh crore in the current financial year. Her statement came in the light of increased fertilizer prices in the international market over recent months. The Budget had made a provision of Rs 1.05 lakh crore for fertilizer subsidy. Thus, the subsidy is estimated to reach Rs 2.15 lakh crore in FY23. The fertilizer subsidy for FY22 was Rs 1,62,132 crore. Chemicals and Fertilizers Minister Mansukh Mandaviya had said only recently that the total fertilizer subsidy might go up to Rs 2-2.5 lakh crore.

Due to a rise in prices in the international market, the government on April 27 increased the subsidy on Di-Ammonium Phosphate (DAP) to Rs 2,501 per bag, an increase of 50 per cent on the earlier subsidy. This was announced while notifying the new subsidy rates for the raw materials of complex fertilizers under the Nutrient-Based Subsidy (NBS) scheme. As a result, farmers are still getting DAP and Nitrogen, Phosphorus and Potash (NPK) fertilizers at earlier rates.

The earlier DAP subsidy had been Rs 1,650 per bag, which was increased to Rs 2,501 per bag. The government had then said that the prices of DAP and its raw materials had gone up by about 80 per cent. The DAP subsidy level has gone up to Rs 50,013 per tonne after the new NBS rates came into effect.

Earlier, in March, the fertilizer companies had increased the DAP price to Rs 1,350 per bag (50kg), an increase of Rs 150 per bag. The prices of the three variants of the NPK complex fertilizers range from Rs 1,450 to Rs 1,470 per bag.

Besides urea, India primarily imports potassic and phosphatic fertilizers. There has been a steep hike in the prices of these fertilizers and their raw materials due to the Russia-Ukraine war. Russia and Belarus happen to be the largest suppliers of fertilizers. The war has disrupted the supply from these countries.