Cabinet nod to Rs 22,303-cr non-urea fertiliser subsidy for rabi season
The Cabinet on Wednesday approved Nutrients Based Subsidy (NBS) rates for phosphatic and potassic (P&K) fertilisers for the rabi season (October – March) 2023-24 at Rs 22,303 crore. This represents a 57% decline compared to previous year thanks to a fall in the global prices of the soil nutrients.
In 2022-23, total NBS for both kharif and rabi seasons was Rs 1.12 trillion while in the current fiscal the non-urea subsidy burden is likely to decline by 46% to Rs 60,303 crore.
In the 2022-23 rabi season, the subsidy for N,P, K and S fertilisers was Rs 98.2/kg. Rs 66.93/kg, Rs 23.65/kg and Rs 6.12/kg respectively.
Information and broadcasting minister Anurag Thakur said that the farmers will continue to pay same prices prevailed last year and the subsidy is aimed to insulate farmers from any spike in the prices of di-ammonium phosphate (DAP) and other non-urea nutrients in the global markets. “The subsidy will continue because when international prices rise the government doesn’t want it to impact our farmers in the country,” Thakur said. These soil nutrients are largely imported.
In May, the Cabinet had approved a subsidy of Rs 38,000 crore for P&K fertilisers for the kharif 2023 season (April-September) under the NBS mechanism, as against Rs 61,000 spent during last kharif season.
Trade sources said that global DAP prices in September this year was $ 528/tonne, a decline of close to 30% from a year ago. Other fertilisers prices have declined from the previous year.
Sources said fertiliser subsidy in FY24 is likely to be at around the budget estimate of Rs 1.75 trillion. The government has spent 54% of the total budget in the first half of current fiscal.
Fertiliser subsidy in FY23 stood at an all-time high of Rs 2.53 trillion, owing to the spike in global commodity prices. It was for the third year in a row that fertiliser on soil nutrients had crossed 1 trillion.
Retail prices of phosphatic and potassic (P&K) fertilisers, including DAP were ‘decontrolled’ in 2010 with the introduction of a ‘fixed-subsidy’ regime as part of NBS mechanism. However, the government was forced to increase the subsidy to ensure that farmers get adequate quantities of the nutrients at affordable rates. The subsidy is likely to benefit about 120 million farmers.
In the case of urea, farmers pay a fixed price of Rs 266 per bag (45 kg) against the cost of production of around Rs 2650 per bag. The balance is provided by the government as a subsidy to fertiliser units.
The government announces NBS for kharif and rabi seasons. In terms of volume, imports account for a third of domestic soil nutrients consumption of around 65 million tonne annually.
Nearly half of its DAP requirements are imported via (mainly from West Asia and Jordan) while the domestic muriate of potash (MoP) demand is met solely through imports (from Belarus, Canada and Jordan, etc).
India meets about 75-80% of the volume of consumption of urea from domestic production while the rest is imported from Oman, Egypt, the UAE, South African and Ukraine.
