Centre to announce subsidy rates for nutrient-based fertiliser for rabi crops soon
The Centre will soon announce the subsidy rates for nutrient-based fertiliser for the rabi season. These rates may be a bit higher than those announced for the Kharif season since companies have already imported the required amount to make sure there is enough for the sowing season.
In April, the government announced the Nutrient Based Subsidy (NBS) rates for Phosphatic (P) and Potassic (K) fertilisers for the Kharif season (April–September), with an estimated outlay of ₹60,939.23 crores. This includes support for indigenous fertiliser (SSP) through freight subsidy and extra support for both domestic production and imports of Di-ammonium phosphate (DAP).
During Kharif, the subsidy rates were ₹91.96/kg for nitrogen (N), ₹72.74/kg for phosphorus (P), and ₹25.31/kg for potassium (K). But since global fertiliser prices changed after April, the government promised fertiliser companies that they could keep importing for the rabi season so that there wouldn’t be a shortage of DAP and Muriate of Potash on the domestic market (MOP).
Average price of imports
In May, the average price to import urea was $722/tonne, but in August, it was $593/tonne, and the average price to import DAP was $891/tonne, down from $936/tonne in May and $945/tonne in July. But MOP has stayed the same since March 2022 at $590/tonne.
The fertiliser industry told the government that since current sales are from stock that was contracted for import before August, the subsidy for the rabi season should take that into account. Sources also said that the current drop in global prices, at which the import contract will be signed, should be taken into account in the next revision of the subsidy for the Kharif season in 2023.
Choice about urea
‘If the government wants companies to keep importing and selling at the unofficial MRP, there needs to be a price increase of at least ₹79/kg in P and ₹27-28 in K,’ said a representative from the industry who attended a meeting with the Fertilizer Ministry to talk with stakeholders. He said that the government needs to decide what to do about urea because it pays all of the subsidies and the price of gas, which is used to make nitrogen, has gone up.
After talking with other ministries, the Department of Fertilizers is thought to have sent the cabinet its recommendation on the NBS subsidy for the rabi season.
Even though the government has a policy of a fixed subsidy for P&K and gives companies the freedom to set retail prices based on import costs, sources say that there has been an unofficial cap on the MRP of DAP at ₹1,350/bag (of 50 kg) and MOP at ₹1,700/bag. In the last two years, the subsidy for DAP has also gone up a lot to make sure that farmers get the same amount.
Fertilizer subsidies have reached ₹61,449 crores in the first five months of the current fiscal year. This is made up of ₹47,790 crores for urea and ₹13,659 crores for P&K. However, the budgeted amount is ₹1.05 lakh crores, which is made up of ₹63,222.32 crores for urea and ₹42,000 crores for P&K.