Shares of nine fertiliser companies rose by 1.67% to 6.62% after the government on Wednesday increased its share of subsidy for di-ammonia phosphate (DAP) fertiliser by 140% from Rs 500 to Rs 1,200 per bag.
National Fertilizers (up 6.62%), Rashtriya Chemicals & Fertilizers (up 5.81%), Fertilizers & Chemicals Travancore (up 5.61%), Deepak Fertilisers & Petrochemicals (up 4.88%), Coromandel International (up 3.65%), Gujarat State Fertilizers & Chemicals (up 3.52%), Chambal Fertilisers & Chemicals (up 3.14%) and GNFC (up 1.67%) advanced.The government has decided to increase the subsidy for DAP fertiliser from Rs. 500 per bag to Rs. 1200 per bag, which is an increase of 140%. Thus, 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.
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 1200 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 2400, which could be sold by fertilizer companies at Rs 1900 after considering a subsidy of Rs 500. With the latest decision, farmers will continue to get a DAP bag for Rs 1200.
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.
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