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Govt Approves Rs 1.08 Lakh Crore Kharif Fertiliser Subsidy to Boost Agriculture Sector

Union Minister Mansukh Mandaviya and Ashwini Vaishnaw addressed the media at the National Media Center in New Delhi on May 17, 2023, revealing significant updates on Cabinet decisions.

Shivam Dwivedi
Govt Approves Rs 1.08 Lakh Crore Kharif Fertiliser Subsidy to Boost Agriculture Sector (Photo Source: Pixabay)
Govt Approves Rs 1.08 Lakh Crore Kharif Fertiliser Subsidy to Boost Agriculture Sector (Photo Source: Pixabay)

Among the announcements made, the fertilizer minister provided assurance that the prices of urea and diammonium phosphate (DAP) would remain consistent throughout the season. Although imported fertilisers continue to be costly due to global factors, the annual subsidy is projected to be slightly lower than the previous year.

Global factors, including decreased production and heightened logistics costs, particularly influenced by the situation in Ukraine, have contributed to the persistently high prices of fertilizers. Consequently, the Centre anticipates that this year's fertilizer subsidy will surpass Rs 2.25 lakh crore. In line with this, the Union Cabinet granted approval for a Rs 1.08 lakh crore subsidy for the ongoing kharif or monsoon season, as announced by Fertiliser Minister Mansukh Mandaviya.

Out of the total subsidy amount, Rs 38,000 crore will be allocated for subsidizing phosphatic and potassic (P&K) fertilizers, while Rs 70,000 crore will support the urea subsidy. Comparatively, last year's fertilizer subsidy reached approximately Rs 2.56 lakh crore. Minister Mandaviya affirmed that the Centre is committed to maintaining stable prices for urea and DAP throughout the season. Currently, urea is priced at Rs 276 per bag with subsidies, and DAP is priced at Rs 1,350 per bag. This decision will benefit around 12 crore farmers across the nation.

Urea consumption in the country ranges between 325 and 350 lakh metric tonnes (LMT). Additionally, 100 to 125 LMT of DAP, 100 to 125 LMT of NPK, and 50 to 60 LMT of Muriate of Potash (MoP) are sold annually. Minister Mandaviya emphasized the importance of timely access to fertilizers for farmers, stating that they should not be burdened during a period of high international prices.

Typically, the fertilizer subsidy ranges between Rs1 lakh crore and Rs 1.25 lakh crore. However, last year's subsidy reached Rs 2.56 lakh crore due to various factors. With cultivation taking place across 1,400 lakh hectares of land in the country, the fertilizer subsidy per hectare amounts to approximately Rs 8,909. Each individual farmer receives a subsidy of Rs 21,223.

Minister Mandaviya explained that the actual price of a bag of DAP is Rs 4,000, but farmers can acquire it at the subsidized rate of Rs 1,350 per bag, with a subsidy of Rs 2,461 per bag. The NPK subsidy amounts to Rs 1,639 per bag, and the MoP subsidy stands at Rs 734 per bag. The Centre incurs an expense of Rs 2,196 per bag of urea.

He further elaborated that the subsidy rate is determined based on the average price of imported fertilisers over the past six months. The government ensures an adequate stock of 150 LMT to prevent any inconvenience to farmers, making it available for the kharif season. The subsidy amount is projected to exceed Rs 2.25 lakh crore this year.

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