Govt raises subsidy on DAP fertiliser by 140% to Rs 1,200 per bag

Government on Wednesday announced "a historic pro-farmer decision" by hiking fertiliser subsidy to Rs 1,200 per bag of DAP.

"PM Narendra Modi chaired a high level meeting on the issue of fertiliser prices. It was discussed that the price of fertilisers is undergoing an increase due to the rising prices of phosphoric acid, ammonia etc internationally. PM stressed that farmers should get fertilisers at old rates despite the international rise in prices. A historic decision was taken to increase the subsidy for DAP fertiliser from Rs 500 per bag to Rs 1,200 per bag, which is an increase of 140%," said Prime Minister's Office in a statement.

Despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs 1200 and the central government has decided to bear all the burden of price hike, PMO said. The amount of subsidy per bag has never been increased so much at once.

Last year, the actual price of DAP was Rs 1,700 per bag. In which the Central Government was giving a subsidy of Rs 500 per bag. So the companies were selling fertilizer to farmers for Rs 1,200 per bag.

Recently, the international prices of phosphoric acid, ammonia etc. used in DAP have gone up by 60% to 70%. So the actual price of a DAP bag is now Rs 2,400, which could be sold by fertiliser companies at Rs 1,900 after considering a subsidy of Rs 500. With today's decision, farmers will continue to get a DAP bag for Rs 1,200.

PM remarked that his government is committed to the welfare of farmers and will take all efforts to ensure that farmers do not have to face the brunt of price-rise, said PMO. 

The Central Government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year. With the increase in subsidy in DAP, Government of India will spend an additional Rs 14,775 crore as subsidy in Kharif season.

This is the second major decision in the farmers’ interest, after directly transferring Rs 20,667 crore in Farmers’ account under PM-KISAN on the day of Akshay Tritiya, said PMO.