Govt cuts subsidy for non-urea fertilisers, to cost Rs 22,186.55 crore for FY21

The Centre on Wednesday slashed the subsidy on non-urea fertilisers, a move that would reduce the burden on the exchequer to Rs 22,186.55 crore in this fiscal amid the COVID-19 outbreak.

A decision in this regard was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi.

"The CCEA has given its approval for fixation of nutrient-based subsidy (NBS) rates for phosphatic and potassic (P&K) fertilisers for 2020-21. The expected expenditure for release of subsidy on P&K fertilisers during 2020-21 will be Rs 22,186.55 crore," Information and Broadcasting Minister Prakash Javadekar told the media after the meeting.

The subsidy for nitrogen has been reduced to Rs 18.78 per kg, phosphorous at Rs 14.88 per kg, potash at Rs 10.11 per kg and sulphur at Rs 2.37 per kg for the current financial year, the fertiliser ministry said in a statement.

For 2019-20, the subsidy for nitrogen was fixed at Rs 18.90 per kg, phosphorous at Rs 15.21 per kg, potash at Rs 11.12 per kg and sulphur at Rs 3.56 per kg. And, the expected expenditure was Rs 22,875 crore during 2019-20.

The CCEA also approved the inclusion of a complex fertiliser namely ammonium phosphate (NP 14:28:0:0) under the NBS scheme.

In 2010, the government had launched the nutrient-based subsidy (NBS) programme under which a fixed amount of subsidy, decided on an annual basis, is provided on each grade of subsidised phosphatic and potassic (P&K) fertilisers, except for urea, based on the nutrient content present in them.

Retail prices of non-urea fertilisers such as Di-ammonium Phosphate (DAP), Muriate of Potash (MoP) and NPK are decontrolled and are determined by manufacturers, while Centre gives a fixed subsidy each year.

The government is making available fertilisers, namely urea and 21 grades of P&K fertilisers to farmers at subsidised prices through manufacturers/importers.

In case of urea, the government fixes the maximum retail price (MRP). The difference between the production cost and the MRP is reimbursed to manufacturers.