Cabinet clears higher subsidy for non-urea fertilisers

Decision comes amid global surge in price of key farm nutrients

With urea and fertiliser prices shooting up in the aftermath of the Russia-Ukraine conflict, the Union Cabinet on Wednesday approved an enhancement in subsidies on non-urea fertilisers for the upcoming Kharif crop, to ₹60,939 crore.

“A historic decision was taken today that there will be no burden on the farmers,” Information and Broadcasting Minister Anurag Thakur said after the Cabinet meeting.

While the government fixes the retail price of urea and subsidises producers based on the difference between costs and the fixed selling price, it pays a subsidy to non-urea fertiliser makers on the basis of nutrient-based rates.

“The increase in the international prices of Di-ammonium phosphate (DAP) and its raw materials have been primarily absorbed by the Union Government,” the Chemicals and Fertilizers Ministry said.

The subsidy will be ₹2,501 per bag on DAP, instead of the existing subsidy of ₹1,650 per bag, which is a 50% increase over last year’s subsidy rates. The increase in the prices of DAP and its raw material is in the range of about 80%.

Prices of phosphoric acid and rock phosphate, key ingredients in such fertilisers have increased by 92% and 99%, respectively, over the 12-month period till March 2022, rating agency Crisil pointed out last week, warning that the country’s fertiliser subsidy bill in 2022-23 could hit a record high of ₹1.65 lakh crore to ₹1.9 lakh crore.