Per kilogram subsidy under NBS regime down due to reduction in rates

Last week, the Centre announced a subsidy under the Nutrient-based fertiliser subsidy regime for April-September 2023 (half year) and also revised it for January-March 2023.

According to the latest notification, there has been a sharp fall — to the tune of almost 81 per cent — in the per kilogram subsidy for nitrogen fertiliser during April-September 2023 compared to January-March 2023. This is mainly due to reduction in urea prices globally as well as domestically.

In the case of phosphorus, the fall has been less. For potassium and sulphur, the drop has been to the tune of 61 per cent and 16 per cent in per kilogram subsidy, respectively.

A report by ICRA said that after the Cabinet decision, the subsidy for P&K fertilisers for the kharif season stood at Rs 38,000 crore against the full-year budgetary allocation of Rs 44,000 crore. 

That apart, the government has also approved a subsidy of Rs 70,000 crore for urea for this kharif season against the full-year budgetary allocation of Rs 1.31 trillion. Thus, the total subsidy approved for this kharif season stood at Rs 1.08 trillion against the full-year budgetary allocation of Rs 1.75 trillion. 

The ministry feels that the subsidy for the full year will stand at Rs 2-2.25 trillion. The revised NBS rates for the kharif season are likely to translate into healthy profits for phosphate fertiliser players at the prevailing rates, ICRA added.