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Fertiliser subsidy paid to the companies during the April-July period of the current fiscal declined by around 41% to about Rs 21,300 crore.
The total subsidy paid in the corresponding period of the previous financial year stood at around Rs 36,000 crore.
In case of phosphate and potassic (P&K) fertilisers like Muriate of Potash (MoP) and Di-ammonia phosphate (DAP), the subsidy paid is fixed by the government while the companies are free to decide prices, sources said, adding that the government, however, still keeps an eye on the retail prices of these fertilisers.
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Whereas in case of urea, a controlled commodity, the retail price is fixed at Rs 5,360 per tonne, and the difference between the cost of production/imported price is paid as subsidy to the companies.
They, however, added that the Department of Fertilizers (DoF) had enough funds in the subsidy account but the payments were delayed as it took time to evaluate the fairness of P&K fertiliser prices.
The government had increased the total fertiliser subsidy in the July budget at Rs 72,970.30 crore for the entire 2014-15 fiscal from Rs 67,970 crore proposed in the interim budget.
The Economic Survey 2013-14 pointed out that the government and farmers are together "wastefully" spending over Rs 8,500 crore on urea, as it is highly subsidised soil nutrient and therefore used instead of P&K fertilisers.
Following which the government had asked the industry to suggest ways to bring down urea consumption that has resulted into a huge subsidy bill besides affecting soil health.
India mainly imports P&K fertilisers in absence of much raw material to produce these ferilisers.
