Cabinet okays Rs 28,655 cr subsidy on P&K fertilisers for rabi season

Total subsidy burden to be around Rs 130,000 in FY-22, almost 63% more than budgeted

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Tuesday approved an additional subsidy of Rs 28,655 crore on phosphatic and potassic (P&K) fertilisers to ensure that farmers get nutrients at affordable prices during the rabi sowing season.

This is in addition to the Rs 14,775 crore of extra subsidy provided in June for Di-ammonia phosphate (DAP) after their prices soared in the global and domestic markets. The Centre had approved a fertiliser budget of Rs 79,530 crore in FY22. Taken together, the total expenditure on fertiliser subsidy after today's allocation will be around Rs 130,000 crore, almost 63 per cent more than the budgeted.

According to an official statement, for the October to March 2021 period, the Nutrient-based subsidy (NBS) regime, the per kg subsidy rates of N (nitrogen) has been fixed at Rs 18.789, P (phosphorus) Rs 45.323, K (potash) Rs 10.116 and S (sulphur) Rs 2.374.

In June, the Centre had provided a subsidy of Rs 700 per bag for DAP to keep their prices at Rs 1200 per bag. 

After today's decision an additional Rs 438 per bag has been provided which will take the total extent of subsidy to Rs 1,138 per bag. The extra subsidy on DAP will cost the exchequer Rs 5,716 crore.

The government said the "total amount of rollover will be Rs 28,602 crore.

Apart from DAP, a special one-time package for additional subsidy on three most consumed NPKs grades viz NPK 10-26-26, NPK 20-20-0-13 and NPK 12-32-16 have been provided at Rs 837 crore cost.

The total subsidy required will be Rs 35,115 crore, the statement said.

The CCEA also approved the inclusion of potash derived from molasses (0:0:14.5:0) under the NBS Scheme.

"Net subsidy required for Rabi 2021-22 after deducting savings will be Rs 28,655 crore," as per the statement.

Listing the benefits, the government on Tuesday said the additional subsidy would enable the smooth availability of all P&K fertilisers to the farmers during Rabi Season 2021-22 at subsidised/affordable prices.

The Centre is supporting farmers and the agricultural sector by continuing the present subsidy levels and giving special packages of additional subsidies for DAP and three mostly consumed NPK grades.

"It will give Rs 438 per bag benefit on Di-Ammonium Phosphate (DAP) and Rs 100 per bag benefit each on NPK 10-26-26, NPK 20-20-0-13 and NPK 12-32-16 so as to maintain prices of these fertilisers affordable to the farmers," the statement said.

The government is making available fertilisers, namely urea and 24 grades of P&K fertilisers to farmers at subsidised prices through manufacturers/ importers.

The subsidy on P&K fertilisers is being governed by the NBS Scheme with effect from April 2010.

In the case of urea, the Centre has fixed the maximum retail prices and reimburses the difference between the MRP and production cost in the form of subsidy.