India’s fertilizer subsidy may drop below Budget Estimate of ₹1.75-lakh-cr
Fertilizer subsidies, which rose to a record high of ₹2.55 lakh crores in 2022-23, may fall below the budget estimate of ₹1,75,103.37 crores in current fiscal as indicated by the first two months of depreciation. However, monsoon rains in the next two months will be a major factor in public support this year.
As per the latest data, the April-May fertilizer subsidy was Rs. 25,606.43 crore – Rs. 16,133.36 crore for urea and Rs. 9,473.07 crore for potash and phosphorous – which is 14.6 per cent of the budget estimate for 2023-24.
Fertilizer consumption decreased by nearly 2 percent to 4.9 million tons during the April-May period compared to a year ago, while urea sales fell by 3 percent to 3.1 million tons.
“The application of fertilizers in the Khareef season is associated with rainfall, although several irrigated areas have been added over the past few years where the source is groundwater. The monsoon is expected to cover the entire country in Earlier than usual, the cultivation activities will pick up pace over the next one to two weeks, and so will the demand for fertilizers.
“normal” monsoon
However, although demand may be higher than last year as the Indian Meteorological Department (IMD) predicted a “normal” monsoon this year, the slump in global fertilizer prices in the past few months has already reduced government subsidies.
IMD data shows that the rainfall deficit across India is 28 percent of the long-term average during the period June 1-25.
Last month, the government said the total subsidy on fertilizers could reach INR 2.25 crore during 2023-24. This includes ₹ 1.08-lakh crores during the current fall season.
The price of imported urea fell to $332 per ton (FOB China) in May compared to an average of $361 in March and $722 in May 2022. The global price of DAP, which peaked at around $950 per ton last year, fell to $514 per ton . tonne (CFR, Mumbai) in May. In addition, potash murat decreased to $422 per ton from $590 in March 2023.
Last month, the center reduced the subsidy amount per kilogram based on the nutrients each compost contained. Accordingly, nitrogen (N) for the fall season will receive a government subsidy of 76.49/kg, down 17 percent from the 2022 kharif subsidy.
Similarly, phosphorus (P) subsidies were reduced by 44 percent to Rs 41.03/kg and potash (K) by 37 percent to Rs 15.91/kg. The sulfur subsidy was also reduced by 58 percent to Rs 2.90/kg.