With new hike, nutrient-based subsidy more than doubles from FY23 Budget Estimate

The nutrient-based subsidy quantum for Rabi season 2022 has been increased from Rs 21,000 crore to Rs 51,875 crore — 147 percent higher than the budget.

Earlier, for the Kharif season as well, the government agreed to cough up an additional Rs 40,000 crore for P&K fertilisers — against a budget of Rs 21,000 crore, the subsidy shot up to Rs 60,939 crore, almost a threefold increase.

So far, the government hasn't provided any additional urea subsidy in the current fiscal, but this could very well figure in the revised estimates of the FY23 Budget.

The fertiliser ministry said: "The progressive expenditure from April 2022 to September 2022 was Rs 82,204 crore, 75.29 percent of the total allocation, of which Rs 55,198 crore has been spent on Urea." The subsidy budget for urea this FY is Rs 63,000 crore, and approximately 88 percent of this has already been utilised.

In May 2022, Prime Minister Narendra Modi said, "A urea bag costing Rs 3,500 is made available to the farmer for Rs 300, while the government bears Rs 3,200 per bag...the Union government gave a subsidy of Rs 1.6 lakh crore last year and this year, this subsidy is going to be more than Rs 2 lakh crore."

The prime minister’s statement came a few days after Finance Minister Nirmala Sitharaman announced on May 21, "In addition to the fertiliser subsidy of Rs 1.05 lakh crore in the budget, an additional amount of Rs 1.10 lakh crore is being provided to further cushion our farmers."

The surge in product, feedstock and gas prices, especially since the Ukraine war, has almost doubled the subsidy rates, particularly for nutrient-based subsidy in India.