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Cabinet approves additional subsidy for P&K fertilisers
The move will cushion prices of crop nutrients that are governed by the Centre’s nutrient-based subsidy (NBS) scheme
New Delhi: The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on Wednesday approved an additional ₹51,875 crore subsidy for phosphatic and potassic (P&K) fertilisers for the rabi or winter-sown season, amid high global prices.
The move will cushion prices of crop nutrients that are governed by the Centre’s nutrient-based subsidy (NBS) scheme. Farmers grow a variety of winter-sown crops, which account for nearly half of India’s annual food output, including wheat, lentils, legumes, millets, vegetables and oilseeds, such as mustard.
Under the NBS policy, the government offers, on an annual basis, a fixed rate of subsidy per kg for crop nutrients containing nitrogen (N), phosphate (P), potash (K) and sulphur (S).
The latest tranche for the winter-sown season, which runs from October to March, will add to the government’s record estimated full-year (2022-23) fertiliser subsidy bill of ₹2.5 lakh crore. It is also substantially higher than the previous season’s ₹28,655 crore subsidy for P&K fertilisers, mainly on account of rising global prices of inputs.
India imports bulk of its crop nutrients, whose prices have spiralled to a five-year high due to the Ukraine war, higher energy costs and knock-on effects on supplies due to pandemic.
“In view of a steep increase in the international prices of fertilizers & inputs i.e. Urea, DAP, MOP and Sulphur, the government has decided to absorb the increased prices by increasing subsidy on P&K fertilizers including DAP. The subsidy would be released to fertilizer companies as per approved rates so that they can make fertilizers available to farmers at an affordable price,” the Cabinet said in a statement.
India’s annual consumption of fertilisers stood at 2021-22 stood at 32.54 million tonnes, against 29.37 million in the previous fiscal, recording a growth of 10.8%, according to the Fertiliser Association of India.
The subsidy on P&K fertilisers includes support for indigenously-made fertilisers through freight subsidy.
The per kilogram subsidy rates on the nutrients are converted into per tonne subsidy on the various types of P&K fertilisers covered under the NBS policy.
The department of fertilizers releases 85% (90% with bank guarantee) ‘on account’ payment of subsidy month-wise to the manufacturers and importers of P&K fertilizers based on receipt of the nutrients from states.
