Fertiliser subsidy may reach top ₹2 lakh crore this fiscal

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The government’s fertilizer subsidy bill may reach about ₹2 lakh crore in the current fiscal. In the first six months of the current fiscal, it has reached 64.4 per cent of the Budget allocation of ₹1.75 lakh crore. However, it may not impact retail prices of fertilizers as the government has assured to shoulder the burden by ensuring that farmers get these crop nutrients at affordable rates.

According to latest data, the total fertilizer subsidy during April-September was ₹1,12,698.58 crore, out of which ₹70,497.88 crore was spent on urea and ₹42,200.7 crore on phosphorus (P) and potash (K).

Officials said the total Budget allocation for P and K subsidy was ₹44,000 crore for the entire fiscal and nearly 96 per cent has been exhausted in six months. The government has allocated ₹22,303 crore subsidy during the current rabi season (October-March) for P and K fertilizers. “At least ₹20,000 crore in addition to the ₹1.75 lakh crore will have to be added if global market rates stay stable at the current level amid the geopolitical tension in the Middle-East,” said a fertilizer industry expert.

He said a major portion of the import has been done for the current season and the contracts in November-December will be mostly for securing supplies for next year’s kharif season.

According to government data, the cumulative availability (including carryover stock from the kharif season) during October 1-23 was urea at 69.04 lakh tonnes (lt), DAP at 27.90 lt, MOP at 6.31 lt, complex at 39.67 lt and single super phosphate (SSP) at 18.95 lt. But sales were only 16.39 lt of urea, 9.08 lt of DAP, 1.06 lt of MOP, 6.71 lt of complex and 3.06 lt of SSP.

Last week, Information and Broadcasting Minister Anurag Thakur last week said depending on international rates, the subsidy might go up or come down, but the government would not let any burden fall on the farmers.

After global prices of various fertilizers skyrocketed in 2022-23, India’s fertilizer subsidy bill reached a record ₹2.25 lakh crore. Prices have fallen from those highs.

Imported urea has fallen to about $360/tonne (f.o.b) now from about $665 in October 2022, that of DAP has reduced to $595/tonne (cfr) from $722 and that of MoP to $319/tonne from $590 a year ago.