Fertilizer subsidies likely to touch all time high this financial year

25 Jul 2022 , 09:49 AM

Due to rising fertilizer and natural gas prices in the international market as well as higher expenses for the main feedstock, natural gas, the government may need to modify the budget estimate (BE) for fertilizer subsidies by almost 140 percent to Rs 2.5 trillion for the current fiscal year. This will be the greatest fertilizer subsidy expenditure in history.

Last year, there was a subsidy on agriculture fertilizers of Rs. 1.6 trillion (updated estimate). Mansukh Mandaviya, the minister of chemicals and fertilizers, recently said that the government will not pass on the cost of the increase in world prices to farmers. As the retail price of the fertilizer is set, the government has been increasing the urea subsidy in line with the increase in expenses.

The nation’s yearly urea use is about 35 million tonnes (MT), of which 26 MT are generated locally and the remainder is imported. The top exporters of urea are South Africa, the UAE, Egypt, Oman, and Oman.

With the NBS program, farmers are intended to be somewhat protected from rises in the cost of DAP and other non-urea fertilizers on the international markets. The government increased the subsidy rates in recent years due to the high cost of imported DAP and MoP, despite the fact that subsidies for P&K fertilizers were restricted in 2010.

Currently, point of sale (PoS) devices placed at outlets since March 2018 are used to sell all subsidized fertilizer to farmers or purchasers. Beneficiaries are recognized using their Aadhaar number, Kisan Credit Card, and other papers.