Govt hikes non-urea fertiliser subsidy to Rs 61,000 cr for 6 mths of FY23

The per-bag subsidy on DAP has been raised by 50% from last fiscal

With prices going through the roof due to the ongoing Russia-Ukraine crisis, the Centre today approved a subsidy of Rs 60,939.23 crore for non-urea fertilisers for the first six months of this financial year. The move would enable companies to continue selling the vital soil nutrients at affordable rates to farmers.

This is almost 45.23 per cent more than the Budget Estimates for non-urea fertilisers for the entire Fy-23

After today's support, companies will be able to sell one bag of Di-Ammonia Phosphate (DAP) at Rs 1350 because the Centre will absorb the remaining cost of the same, estimated to be around Rs 2501 as subsidy.

Till last year, the per bag subsidy on DAP was Rs 1,650, thus marking an almost 50 per cent increase in Fy-23.

Earlier, this month, fertiliser companies had raised DAP prices by Rs 150 per bag from Rs 1200 to Rs 1350.

For NPKS, the prices were increased in the range of Rs 20-110 per 50 kg bag depending upon the grade.

“After today’s subsidy support, most companies will manage to hold on to the hikes or else they would have had to further raise prices of DAP and NPKS as input costs have been continuously rising,” a senior industry official said.

DAP is the second most consumed fertiliser in volume terms in the country after urea.

For other complex fertilisers such as various grades of NPKS, SSP and MOP, the subsidy rates have been determined as per the NBS formula. The subsidy for urea for the 2022-23 financial year is still awaited.

The subsidy approved for both DAP and NPKS (various grades) of fertilisers is almost 45.23 per cent more than the subsidy allocated for non-urea fertilisers as per the Budget Estimates of FY23.

So, for non-urea fertilisers, the Central government had allocated a subsidy of Rs 42,000 crore in the Budget for the entire Fy-23, while in today’s decision it has allocated Rs 19,000 crore extra that too just for the first six months of this financial year till September.