Cabinet approves higher subsidies for urea-free fertilizers


As urea and fertilizer prices soared after the Russia-Ukraine conflict, the Union cabinet on Wednesday approved an increase in non-urea fertilizer subsidies for the upcoming Kharif crop to ₹60,939 crore.

“Today a historic decision was made that there will be no burden on farmers,” said Information and Broadcasting Minister Anurag Thakur after the cabinet meeting.

While the government sets the retail price of urea and subsidizes producers based on the difference between the cost and the fixed selling price, it pays non-urea fertilizer producers a subsidy based on nutrient-based rates.

“The increase in international prices for di-ammonium phosphate (DAP) and its raw materials has been mainly absorbed by the Union government,” the Ministry of Chemicals and Fertilizers said.

The subsidy is ₹2,501 per bag at DAP instead of the existing subsidy of ₹1,650 per bag, a 50% increase over last year’s subsidy rates. The increase in prices of DAP and its raw material is in the range of about 80%.

Prices of phosphoric acid and rock phosphate, the main components of such fertilizers, have risen by 92% and 99% respectively in the 12 months to March 2022, rating agency Crisil pointed out last week, warning that the country’s fertilizer subsidy bill will arrive in 2022 -23 could reach a record high of 1.65 lakh crore to 1.9 lakh crore.

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