Govt approves additional subsidy package of Rs 28,655 crore for nutrient-based fertilisers

The government on Tuesday announced a net subsidy of Rs 28,655 crore on phosphatic and potassic (P&K) fertilisers to ensure that farmers get nutrients at affordable prices during the rabi sowing season. The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the Nutrient Based Subsidy (NBS) rates for P&K fertilisers for October 2021 to March 2022 period.

Rabi (winter-sown) season starts in October. Under the NBS, the per kg subsidy rates of N (nitrogen) has been fixed at Rs 18.789, P (phosphorus) Rs 45.323, K (potash) Rs 10.116 and S (sulphur) Rs 2.374, according to an official statement.

The government said the "total amount of rollover will be Rs 28,602 crore". It has also provided a special one-time package for additional subsidy on DAP at the tentative additional cost of Rs 5,716 crore. A special one-time package for additional subsidy on three most consumed NPKs grades viz NPK 10-26-26, NPK 20-20-0-13 and NPK 12-32-16 have been provided at Rs 837 crore cost. The total subsidy required will be Rs 35,115 crore, the statement said.

The CCEA also approved the inclusion of potash derived from molasses (0:0:14.5:0) under the NBS Scheme. "Net subsidy required for Rabi 2021-22 after deducting savings will be Rs 28,655 crore," as per the statement.

In June also, the CCEA had raised the subsidies for DAP and some other non-urea fertilisers by Rs 14,775 crore. The government had allocated nearly Rs 79,600 crore for fertiliser subsidies in the 2021-22 Budget and the figures could rise after the provisions of additional subsidies.

Listing the benefits, the government on Tuesday said the additional subsidy would enable the smooth availability of all P&K fertilisers to the farmers during Rabi Season 2021-22 at subsidised/affordable prices. The Centre is supporting farmers and the agricultural sector by continuing the present subsidy levels and giving special packages of additional subsidies for DAP and three mostly consumed NPK grades.

"It will give Rs 438 per bag benefit on Di-Ammonium Phosphate (DAP) and Rs 100 per bag benefit each on NPK 10-26-26, NPK 20-20-0-13 & NPK 1 2-32-16 so as to maintain prices of these fertilisers affordable to the farmers," the statement said.

In June, the government had increased the subsidy on DAP by 140 percent to Rs 1,200 per bag (of 50 kg each) to ensure that farmers continue to get this important fertiliser at an affordable rate despite the rise in global prices. The government is making available fertilisers, namely urea and 24 grades of P&K fertilisers to farmers at subsidised prices through manufacturers/ importers.

The subsidy on P&K fertilisers is being governed by NBS Scheme with effect from April 2010. In the case of urea, the Centre has fixed the maximum retail prices and reimburses the difference between the MRP and production cost in form of subsidy.