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The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved a subsidy of ₹22,303 crore for a range of fertilisers to be used during the rabi or winter-sown season, keeping prices steady, information and broadcasting minister Anurag Thakur said.
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 supply, including wheat, lentils, legumes, millets, vegetables and oilseeds, such as mustard.
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Under the NBS policy, the government offers, on annual basis, a fixed rate of subsidy on a per kg basis for crop nutrients containing nitrogen (N), phosphate (P), potash (K) and sulphur (S).
Fertiliser 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. Availability of cheap fertilisers is critical for the country’s food security and ample harvests.
For 2023-24, the Union budget in February allocated ₹1.75 lakh crore for fertiliser spending, but even though global crop-nutrient rates have stabilised, actual full-year spending may rise if rates go up.
“Depending on international rates, the subsidy may go up or come down, but the government will not let any burden fall on farmers,” the minister said.
India relies on imports to meet its total fertilizer demand. Global prices of various farm chemicals had 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 that year. Prices have since come down from those peaks.
The new rates of subsidy for the season according to an official are as follows: ₹47.02 per kg for nitrogen, ₹20.82 per kg of on phosphorus, ₹2.38 per kg on potash and ₹1.89 per kg on sulphur.
Di-ammonium phosphate will continue to be sold at ₹1,350 per bag, while for muriate of potash, the prices are slightly lower, the official said.
India’s annual consumption of fertilisers stood at 2022-23 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.
Under the NBS policy, the per kilogram subsidy rates on the nutrients are converted into per tonne subsidy on the various types of P&K fertilisers covered. 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.
Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.