Govt Plans To Reduce Fertiliser Subsidy To Rs 1 Lakh Crore Annually; PM PRANAM, MDA Schemes Likely To Get Cabinet Nod This Week

India is reportedly planning to reduce fertiliser subsidy to Rs 1 lakh crore each in FY25 and FY26.

This will be done after implementing the PM PRANAM scheme and the liberalised Market Development Assistance scheme, which the Union Cabinet is likely to approve this week, Moneycontrol reported citing a government official.

"We aim at Rs 3.7 lakh crore total subsidy over three years FY24-FY26. This fiscal year, the budgeted fertiliser subsidy is Rs 1.75 lakh crore approximately, and Rs 1 lakh crore will be added for each of the next two years. The subsidy burden on the government will reduce due to PM PRANAM and Market Development Assistance schemes," the official was quoted as saying by Moneycontrol.

The government official also revealed that the Cabinet is likely to approve three schemes this week – PM PRANAM, the liberalised MDA scheme, and Urea Gold.

PM PRANAM (PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth) incentivises state governments to reduce the consumption of chemical fertilisers and increase the use of bio and organic fertilisers.

According to the official, if the states reduce consumption of chemical fertilisers as compared to the average of the last three years, 50 percent of the subsidy saved will be transferred to them.

The scheme is conditional on chemical fertiliser consumption of neighbouring districts not increasing and the decrease should not be due to any natural calamity, the official added.

The Centre plans to allow states to use the monetary incentive as capital expenditure, providing them with much-needed funds for projects that have been affected by the Covid-19 pandemic.

According to the official, the PM PRANAM initiative, in combination with liquid nano urea, is expected to save the Centre Rs 19,000 crore over three years.

Liquid nano urea, a nitrogen fertiliser that is said to be more efficient and cost-effective, has the potential to significantly reduce the import of granular urea. This innovative fertiliser has been developed using nanotechnology to enhance the effectiveness of crop nutrients.

The liberalised MDA scheme, which aims to promote composting in cities, has a total outlay of Rs 1,451 crore over three years, including FY24.

The scheme will provide a subsidy of Rs 1,500 per tonne to compost manufacturers and is expected to expand to include organic waste such as biogas, green manure, and composting in rural areas. This initiative will encourage the use of alternative fertilisers and complement the Swachh Bharat Mission.

This week, the Cabinet is also expected to approve Urea Gold, also known as sulphur-coated urea, which will be sold at market rates.

The official stated that the cost and bag size details will be finalised later.