Centre hikes fertilizer subsidy for FY22 by Rs 14,775 crore

The union government has decided to increase the fertilizer subsidy outlay for the year by 14,775 crore, after a meeting chaired by Prime Minister Narendra Modi on the prices of fertilizers, an official statement said on May 19.

This will take the fertilizer subsidy outlay for 2021-22 to Rs 94,305 crore from a budgeted outlay of Rs 79,530 crore.

“It was discussed that the price of fertilisers is undergoing an increase due to the rising prices of phosphoric acid, ammonia etc internationally. PM stressed that farmers should get fertilisers at old rates despite the international rise in prices,” the statement said.

It added that a decision was taken to increase the subsidy for diammonium phosphate (DAP) fertilizer from Rs 500 to Rs 1200 per bag, an increase of 140 per cent.

“Thus, despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs 1200 and the central government has decided to bear all the burden of price hike,” it said.

Earlier this month, the central government had asked the fertiliser industry to maintain retail prices of fertilizers at “reasonable” levels, as the cost of their raw materials and imports surged due to an uptick in global commodity prices.

“Recently, the international prices of phosphoric acid, ammonia etc, used in DAP have gone up by60-70 per cent. So the actual price of a DAP bag is now Rs 2400, which could be sold by fertilizer companies at Rs 1900 after considering a subsidy of Rs 500. With today’s decision, farmers will continue to get a DAP bag for Rs 1200,” the press release stated.

“With the increase in subsidy in DAP, Government of India will spend an additional Rs 14,775 crore as subsidy in Kharif season,” it said, indicating that if need be, a further increase in fertilizer subsidies was possible.

In 2020-21 as well, the centre had increased the fertilizer subsidy outlay from Rs 71,309 crore to Rs 1.34 lakh crore, a jump of nearly 88 per cent.