Government set to raise the fertilizer subsidy

Government set to raise the fertilizer subsidy

Recently it has been decided that the government will increase the subsidy on fertilizers to ensure fair price for the farmers.

An inter-ministerial committee has recommended revision of nutrient-based subsidy rates for nutrients such as nitrogen, phosphorus, potassium and sulphur for the Kharif season 2022.

The revision of subsidy has been recommended on the basis of the average international prices of fertilizers in March 2022 as a special case this year.

In April 2022, the international prices of urea have increased by 145% as compared to April 2021.

The prices of DAP (Di-Ammonium Phosphate) have increased by 66%, while the prices of MOP (Muriate of Potash) have increased by 116 per cent as compared to the corresponding month of last year.

In the Union Budget 2022-23, the government has allocated a combined amount of Rs 1.09 lakh crore for fertilizer subsidy. Of this, Rs 42,000 crore has been allocated for phosphatic and potassic (P&K) fertilizers, and Rs 67,187 crore for urea. This amount is less than last year’s budget allocation of Rs 1.62 lakh crore.

Reasons for increased fertilizer prices:

  • The prices of raw materials such as ammonia and phosphoric acid have increased;
  • The Russo-Ukraine War has led to an increase in fuel prices (oil and gas prices);
  • Due to strict export control by China on DAP etc., there has been a decrease in the finished products in the world market etc.

Importance of increasing fertilizer subsidy:

  • Farmers will get relief.
  • This step is important for importers to enter into agreements.
  • This will help in alleviating the worry of food inflation.

India’s fertilizer imports:

India imports about 25% of its consumption of urea, about 95% of phosphates and about 100% of potash fertilizers.

Source – The Hindu

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