Cabinet nod to ₹1.08 lakh crore kharif fertiliser subsidy
The Union Cabinet Wednesday decided not to increase fertiliser rates and approved a crop-nutrient subsidy of ₹1.08 lakh crore for the June-September kharif or summer-sown season.
The Union Cabinet Wednesday decided not to increase fertiliser rates and approved a crop-nutrient subsidy of ₹1.08 lakh crore for the June-September kharif or summer-sown season, Union health, fertilisers and chemicals minister Mansukh Mandaviya said at a media briefing here.
The country has sufficient stocks and arrangements for all key fertilisers, including urea, the minister added. India’s food security is closely linked to the availability of fertilisers, which are federally subsidised for millions of farmers. The summer-sown season accounts for nearly half of the country’s annual food supply.
“International rates of fertilisers have come down slightly. So that farmers keep getting timely access to fertlisers and don’t face any financial burden, the Modi government has always been prompt. There will be no increase in fertilizer prices for the kharif season for farmers,” the minister said after the Cabinet meet.
India relies on imports to meet its total fertilizer demand. Global prices of various farm chemicals rocketed to multi-year highs in 2022-23 due to the Ukraine conflict, resulting in a total fertiliser subsidy bill of a record ₹2.56 lakh crore, the minister said.
An emerging El Nino, a monsoon-disrupting global weather pattern, is a key risk to summer crops this year. Although the India Meteorological Department forecast a normal monsoon in April, it did not discount the possibility of an El Nino impacting the monsoon rains, which are critical because nearly 51% of the country’s farmlands don’t have access to irrigation. The share of net-irrigated area accounts for about 49% of the country’s total net-sown area, according to official data.
“If rains are scanty, the demand for fertilisers could go up to keep crops healthy,” said Rahul Chouhan of IGrain Pvt Ltd.
Fertilizer companies sell their products at a discount to cultivators through internet-enabled rural outlets. The government then pays the difference between market rates and the discount to the firms.
For 2023-24, the Union budget in February allocated ₹ 1.75 lakh crore, but even though fertilizer rates have stabilized, actual full-year spending could cross ₹ 2 lakh crore again, Mandaviya said.
“There has been no shortage of fertilisers in the past nine years,” Mandaviya said, adding: “There might have been one or two instances of temporary delay due to delay in (railway) racks reaching their destinations.”
India’s better stocks position this year comes on the back of higher domestic output of nano urea, a highly efficient novel form of the nutrient.
The total cultivated area in the country is estimated at 140 million hectare. “Given the final fertilizer subsidy spending what it was in 2022-23, it works out to ₹8909 per hectare subsidy spending on fertilizers,” the minister said. Economists generally use the net-cultivated area, which varies from year to year, to make most crop calculations.
The minister also said the government spent roughly ₹ 21000 per cultivator as fertilizer subsidy in 2022-23. India has an estimated 120 million farmers.
To hedge against price and supply swings amid a lumbering Russia-Ukraine conflict and other ongoing geopolitical risks, the Modi government has signed several long-term import deals at pre-negotiated rates with several nations.
The fertilizer ministry in coordination with the external affairs ministry has overseen a slew of these deals. Indian firms have for the first time finalised investments in several North African mineral-rich nations, part of measures aimed at securing long-term supplies.