To protect farmers from the sharp rise in prices, the Center has announced to double the fertilizer subsidy from the budget level of FY23 to Rs 2.15 trillion. The move was prompted by the sharp rise in global prices of urea, DAP and MOP over the past year. “Despite the rise in global fertilizer prices, we have protected our farmers from such price hikes. In addition to the Rs 1.05 trillion fertilizer subsidy in the budget, an additional Rs 1.10 trillion is being provided to our farmers for further cushioning, ”FM tweeted.
On April 27, 2022, the Center had stated that the rate of Nutrition-Based Subsidy (NBS) for Phosphatic and Potassic (P&K) fertilizers during the kharif season (April-September, 2022) would be Rs 60,939 crore as against Rs 57,150 crore last year.
These soil nutrients are mainly imported.
The budget outlay on FY22 in fertilizer subsidy was Rs 1.6 trillion. The retail prices of phosphatic and potassic (P&K) fertilizers, including DAP, were ‘regulated’ in 2010 by introducing a ‘fixed-subsidy’ system as part of the NBS process.
However, DAP subsidies have increased spending by 60% on FY22, up from a little over 30% previously.
According to the Ministry of Fertilizers, the price of imported urea has risen by more than 145% to 9 930 per tonne in April 2022, from 3 380 a year ago.
Similarly, prices of DAP and MOP rose 66% and 116%, respectively, to 9 924 and 90 590 per tonne in April 2022, compared to the same period a year earlier.