Additional fertilizer subsidy of Rs 1.10 lakh crore

May 25, 2022

Union Finance Minister recently announced that the government will provide an additional fertilizer subsidy of Rs 1.10 lakh crore to protect farmers from the rise in fertilizer prices.

What will be the total fertilizer subsidy?

With the recent announcement, the government’s total fertilizer subsidy will reach Rs 2.15 lakh crore in the current financial year (2022-23). A fertilizer subsidy of Rs 1.05 lakh crore was announced in the 2022-23 Budget. In 2021-22, the fertilizer subsidy was Rs 1, 62,132 crores.

Why there is a surge in global fertilizer prices?

The Russia-Ukraine war led to supply chain disruptions and the global fertilizer prices have risen. India is dependent on imports for urea, potassic and phosphatic fertilizers.

On which fertilizers subsidy is provided?

The government ensures that urea and 24 grades of P&K fertilizers are available to farmers at subsidized prices. For urea, the Centre fixes the MRP. The difference between MRP and production cost is reimbursed in the form of a subsidy. Whereas, the subsidy on the various P&K fertilizers is covered under the nutrient-based subsidy (NBS) Policy.

Under the NBS Policy, the government annually announces a fixed rate of subsidy on Nitrogen (N), Phosphate (P), Potash (K), and Sulphur (S). In April 2022, the Union Cabinet approved a subsidy of Rs 60,939 crore on phosphatic and potassic (P&K) fertilizers for the Kharif season to provide fertilizers to farmers at a reasonable price.

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