Cabinet approved ₹60,939.23 cr subsidy for DAP, MoP fertilizers for the Kharif season.
The Cabinet approved Nutrient Based Subsidy (NBS) prices for Phosphatic (P) and Potassic (K) fertilizers on Wednesday in order to ensure that the fertilizers are accessible in time for the Kharif planting season. This approval will aid enterprises in planning their fertilizer imports, as the country is mostly reliant on imported phosphatic fertilizers.
Based Subsidy Scheme (NBS)
The Nutrient Based Subsidy Scheme (NBS) enables manufacturers, marketers, and importers to fix fair MRPs for Phosphatic and Potassic (P&K) fertilizers.
‘The Cabinet has confirmed a subsidy of ₹60,939.23 crores for the NBS Kharif-2022 (until September 30), the government said in a statement,’ including support for indigenous fertilizers—SSP through freight subsidy and additional support for indigenous manufacturing and imports of Di-Ammonium Phosphate (DAP).
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Subsidies have been doubled
Despite the government’s announcement that the DAP subsidy per bag (50 kg) will grow to ₹2,501 from ₹1,650, the average subsidy was ₹1,211.55 per bag in 2021-22. This means that, at least for the Kharif season, the subsidy has more than doubled.
Farmers will continue to get DAP at ₹1,350 per bag, according to Information and Broadcasting Minister Anurag Thakur, who announced the cabinet decision. IFFCO recently increased the price of DAP to ₹1,350 per bag, up from ₹1,200 last fiscal.
According to sources, the subsidy on muriate of potash (MoP) has been fixed at about ₹750 per bag. Despite the fact that it has more than doubled from last year’s ₹303 per bag (year average), it is unlikely to lower its present retail prices of ₹1,700-1,750 because potash import costs are too high. In 2021-22, MoP’s yearly average MRP was ₹1,130 per bag.
‘Even in 2011, with a global price spike, the government subsidized to the tune of roughly ₹1,000 per bag. However, after the Russia-Ukraine war, there has been an extraordinary rise, and any cooling is predicted only once the battle is over and shipments from the war zone restart,’ said an industry analyst.
The Centre has absorbed the majority of the increase in international prices of DAP and its raw materials, and the increase in global prices of these fertilizers and their raw materials is in the region of about 80%.
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‘The decision would boost the agriculture sector by assisting farmers in receiving notified P and K fertilizers at subsidized, affordable, and acceptable pricing,’ according to the statement.
‘As far as the farmers are concerned, we have provided benefits from time to time. There has been a significant increase in raw material costs, shipping costs, and other components, resulting in an overall price increase for P and K fertilizers,’ Thakur stated.
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