Fertilizer subsidy could rise by 55% to register Rs 2.5 lakh crore in FY23: government sources


India’s fertilizer subsidy bill is expected to rise by 55% to Rs 2.5 lakh crore this fiscal year as the government will provide additional funds to offset soaring costs from rising import prices, officials said on Thursday. important sources. The government will ensure that there is no shortage of fertilizer in the country during the kharif (summer sowing) and rabi (winter sowing) season and it is already in talks with major global producers to import essential nutrients from the soil, they added.

According to the sources, Union Chemicals and Fertilizers Minister Mansukh Mandaviya is expected to visit many countries including Saudi Arabia, Oman and Morocco soon to secure imports in the short and long term. . “The government is working hard to ensure that there is no shortage of fertilizer in the country,” a senior government official said, adding that the country has sufficient stocks for the kharif season in course, and that there would be no problems during the rabi season because Bien.

It should be noted that the consumption of fertilizers in the rabi season is 10-15% higher than in summer crops. The government will not raise retail prices for urea and will also provide adequate subsidies to ensure maximum retail prices for urea-free fertilizers remain at current levels, the sources said.

The government has taken the historic decision on the fertilizer front not to pass the burden on to farmers, the sources said, adding that due to rising subsidies, the selling prices of urea and DAP ( di-ammonium phosphate) are significantly lower in India compared to countries like USA, China and Brazil.

On Wednesday, the Union Cabinet approved a grant of Rs 60,939.23 crore for phosphate and potash fertilizers including DAP for the first six months of this financial year. “The subsidy bill for 2022-23 could reach Rs 2.25-2.5 lakh crore. Due to the COVID pandemic, the production, import and transportation of fertilizers have been disrupted globally, the ripple effects of which are being felt in all countries including India,” said said the senior government official.

The total fertilizer subsidy stood at Rs 1,62,132 crore in the financial year 2021-22 and Rs 71,280 crore in the financial year 2013-14. Major exporters like China, which supplies 40-45% of phosphate imports to India, have reduced their exports due to reduced production. Due to the pandemic, the ongoing war between Russia and Ukraine, and global sanctions against Iran and Russia, international fertilizer prices have increased significantly. In addition, transportation costs have increased fourfold, the sources said.

Urea prices increased to USD 930 per tonne in April 2022 from USD 380 per tonne a year ago. Similarly, DAP prices rose from USD 555 per tonne to USD 924 per tonne. In India, the sources said, farmers buy the two key fertilizers at heavily subsidized rates. Urea is available at Rs 266 for a 45 kg bag while DAP is sold at Rs 1,350 for a 50 kg bag.

The current subsidy on urea is around Rs 3,700 per bag and Rs 2,501 on DAP. The sources also said that old fertilizer orders from Russia were being shipped to India, but no new import deal was concluded due to the prevailing uncertainty over the payment mechanism. The annual national production of urea is about 260 lakh tons against a demand of 325 lakh tons.

The gap is filled by imports. In the case of DAP, the domestic production is 50 lakh tons and the country imports around 70 to 75 lakh tons to meet the needs. The government is reviving several closed urea plants to make India self-sufficient. At present, the domestic production cost of urea is much cheaper than that of imported urea.

However, in the case of DAP production, it is quite the opposite in the current scenario. The government is also promoting the use of nano-urea, which was launched last year by IFFCO. Nano-urea is in liquid form and costs Rs 260 per 500ml bottle. One bottle is roughly equal to one bag of traditional urea.

Currently, the production of nano-urea is 2 lakh bottles per day and is expected to increase several times by the end of the year. The government is also considering a proposal to allow IFFCO to produce nano-DAP. On Wednesday, the government announced a subsidy of 2,501 rupees per bag on DAP, 50% more than the existing subsidy of 1,650 rupees.

The government makes fertilizers, namely urea and 25 grades of P&K fertilizers, available to farmers at subsidized prices through fertilizer manufacturers/importers. Under the Nutrient Based Subsidy (NBS) scheme, which has been in operation since April 2010, a fixed subsidy rate (in rupees per kg) is announced for nutrients, namely Nitrogen (N ), Phosphate (P), Potash (K) and Sulfur (S) by the government on an annual basis. Subsidy rates per kg for the nutrients N, P, K and S are converted to subsidies per tonne for the various P&K fertilizers covered by the NBS. In the case of urea, the Center sets the maximum sale prices and reimburses the difference between the maximum sale price and the cost of production in the form of a subsidy.


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