Cabinet nod for ₹1.08 lakh crore kharif fertilizer subsidy

A farmer spreads fertilizer in a field at a village in Madurai. File
| Photo Credit: PTI

With fertilizer prices continuing to remain high due to global factors — such as a fall in production and hiked logistics costs, especially due to the Ukraine situation — the Centre expects this year’s fertilizer subsidy to cross ₹2.25 lakh crore. Accordingly, the Union Cabinet on Wednesday approved a ₹1.08 lakh crore subsidy for the ongoing kharif or monsoon season, Fertilizers Minister Mansukh Mandaviya said.

Out of this, ₹38,000 crore will subsidise phosphatic and potassic (P&K) fertilizers, while ₹70,000 crore will go toward the urea subsidy. Last year, the total fertilizer subsidy was about ₹2.56 lakh crore.

Stable urea, DAP rates

Mr. Mandaviya told journalists that the Centre would ensure that the prices of urea and diammonium phosphate (DAP) would remain unchanged during the season. At present, the subsidised rate of urea is ₹276 per bag and the price of DAP is ₹1,350 per bag. The decision will benefit about 12 crore farmers, the Minister added.

The total consumption of urea in the country is about 325 to 350 lakh metric tonnes (LMT). Apart from this, 100 to 125 LMT of DAP; 100 to 125 LMT of NPK; and 50 to 60 LMT of Muriate of Potash (MoP) are also sold in the country. “Farmers should get fertilizers on time. They should not be burdened at a time international prices are high,” he said.

12 cr farmers benefit

The Minister said that the fertilizer subsidy usually ranged between ₹1 lakh crore and ₹1.25 lakh crore. “Last year, it was ₹2.56 lakh crore,” he said, adding that as cultivation takes place on 1,400 lakh hectares of land across the country, the fertilizer subsidy for one hectare is about ₹8,909 subsidy. “We have 12 crore farmers and one farmer gets ₹21,223 subsidy,” he said.

The actual price of a bag of DAP was ₹4,000, Mr. Mandaviya said. “But for farmers, the rate is ₹1,350 per bag. ₹2,461 per bag is the subsidy,” he explained. The NPK subsidy is ₹1,639 per bag, while the MoP subsidy amounts to ₹734 per bag. The Centre spends ₹2,196 per bag of urea

“The rate of subsidy is based on the average price of fertilizer imported to the country in the last six months. We have to stock fertilizer so that farmers do not face any difficulties. We have adequate stocks of 150 LMT, which is available for kharif season,” he said, adding that the subsidy could go beyond ₹2.25 lakh crore this year.