Modi Govt Hikes Fertilizer Subsidy By 140 Per Cent With Rs 14,775 Crore, As Prices Rise Globally

The Modi government has decided to enhance subsidy rates for Di-ammonium Phosphate (DAP) and other Phosphatic and Potassic (P & K) fertilisers for the upcoming Kharif season.

It may be noted that prices of P&K fertilisers are decontrolled and manufacturers are free to fix MRPs of their product. In recent months, international prices of finished fertilisers like DAP and its raw materials like phosphoric acid, ammonia and sulphur have seen huge jumps of 60 to 70 per cent, which in turn has been putting pressure on their domestic prices.

There were reports of DAP being sold by fertilizer companies at an increased MRP of Rs 1,900 per bag in the month of April, which was an increase of Rs 700 bag from price prevailing in the month of March.

Similarly, domestic prices of other P & K fertilisers surged by almost 50 per cent.

“Fertilizer being critical input for agriculture operation, these were increasing hardships of farmers. In view of this the Government, keeping in mind the interest of the farmer, took a prompt and proactive action to address the hardship of the farmers,” the Ministry of Chemicals and Fertilizers said in a statement.

A High Level Meeting was chaired by the Prime Minister (PM) on 19 May, 2021, in which the PM directed that there shall be no increase in price of P&K fertilisers, and that the Central Government would bear all the burden of price increase for the upcoming kharif season as a one-time measure to reduce hardship of farmers during the Covid-19 period.

Thus the subsidy rate for DAP has been enhanced from Rs 511 per bag to Rs 1,211 per bag, an increase of Rs 700 per bag. This will ensure that DAP will continue to be available to the farmers at last years’ price of Rs 1200 per bag.

Subsidy on DAP fertiliser is hiked by 140 per cent. The price of other P & K fertilisers will also reduce to around last years’ prices. The Government will spend an additional Rs 14,775 crore as subsidy in the Kharif season.