Centre approves Rs 22,303 cr subsidy on P&K fertilizers for rabi season

The Union Cabinet on Wednesday revised the per kilogramme subsidy under the nutrient-based regime, lowering it for nitrogen, phosphorus, potassium, and sulphur for the October-March period compared to the April-September period. The cost to the exchequer is estimated at Rs 22,303 crore. Between first half of FY-24 and October to March period, the per kilogram subsidy on nitrogen(N) has gone down by 38 per cent, phosphorus(P) by 49 per cent, potassium(K) by 84 per cent and sulphur (S) by 32.5 per cent (see chart).

Despite a global increase in fertiliser rates, the government said, this decision ensures that Indian farmers will continue to receive urea at a highly subsidised price of Rs 266 per bag. The rates of complex fertilisers like DAP will be Rs 1,350 per bag, NPK of various grades will average Rs 1470 per bag, and MOP will be Rs 1,655 per bag. Notably, MOP rates were around Rs 1,700 per bag in the April-September period.

For the April-September period, the government had estimated an expenditure of around Rs 38,000 crore for the nutrient-based subsidy (NBS) regime.
Following Wednesday’s announcement, total subsidy on non-urea fertilisers is expected to be around Rs 60,000 crore.

The FY24 Budget had projected the subsidy expenditure on non-urea fertilisers at Rs 44,000 crore. In total, fertiliser subsidy (urea and non-urea) was estimated at Rs 175,099 crore. Of this, urea subsidy was estimated at around Rs 131,100 crore, while non-urea fertiliser subsidy was estimated at Rs 44,000 crore.

I&B Minister Anurag Thakur, while briefing reporters on these changes, said the Modi government is committed to ensuring adequate availability of fertilisers to farmers at affordable prices. Asked about the reduction in per kg subsidy rate of N, P, K and S, Thakur explained that international prices of finished products and raw materials have slightly decreased but remain high. Therefore, the government is providing subsidies to maintain previous rates.
Thakur also noted that fertiliser subsidy stood at nearly Rs 2.55 trillion in the last financial year compared to around Rs 73,000 crore in 2014-15.

About benefits from the latest move, the government in a statement assured that it would ensure the availability of fertilisers to farmers at subsidised and reasonable prices.

The government is making available 25 grades of P&K fertilisers to farmers at subsidised prices through fertiliser manufacturers/importers. The subsidy on P&K fertilisers has been governed by the NBS Scheme since April 1, 2010.