Govt hikes nutrient-based fertiliser subsidy for Kharif season

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The federal government on Wednesday mentioned the Nutrient Primarily based Subsidy (NBS) charges for phosphatic and potassic (P&Ok) fertilisers for the Kharif season (April-September, 2022) will likely be Rs 60,939 crore, as towards Rs 57,150 crore for the entire of final yr. The rise in subsidy is supposed to insulate farmers from the will increase within the costs of di-ammonium phosphate (DAP) and different non-urea vitamins within the international markets. These soil vitamins are largely imported.

Final yr’s NBS subsidy included Rs 28,495 crore for the Kharif and Rs 28,655 crore for the Rabi season.

In 2020-21 too, the federal government needed to hike the NBS subsidy steeply given the surge in imported fertiliser costs.

Improve in NBS charges for Kharif season, coupled with an anticipated rise in urea subsidy as a result of elevated costs of each urea and LNG within the international markets may increase India’s fertiliser subsidy bills in 2022-23 to over Rs 2.2 trillion in FY23, analysts say.

Budgeted fertiliser subsidy was at Rs 1.6 trillion in 2021-22.

Retail costs of phosphatic and potassic (P&Ok) fertilisers, together with DAP had been ‘decontrolled’ in 2010 with the introduction of a ‘fixed-subsidy’ regime as a part of NBS mechanism. Nonetheless, the subsidy on DAP noticed a rise to 60% of price in FY22, from a bit of over 30% beforehand.

Nonetheless, the costs have continued to rise within the international markets even after the subsidy hike. Consequently, from a degree of Rs 18,000/tonne in November, the retail value of MoP has risen to the present degree of Rs 32,000/tonne. Equally, the DAP now prices Rs 27,000/tonne to Indian farmers as towards Rs 24,000/tonne in November final yr.

New NBS charges will likely be relevant from April 1, 2022. In 2021-22, authorities had twice revised NBS charges for phosphatic fertilisers.

The cupboard committee on financial affairs (CCEA) has accredited a proposal of fertiliser ministry by offering subsidy of Rs 2,501 per bag (50 kg) on DAP for kharif 2022 as towards present subsidy of Rs 1,650 per bag.

It implies the farmers would get DAP on the Rs 1,350 per bag, whereas the precise price is Rs 3,851 per bag. The subsidy assist supplied by the federal government is for indigenous fertilizer (SSP) by means of freight subsidy and extra assist for indigenous manufacturing and imports of DAP.

“Improve within the worldwide costs of DAP and its uncooked supplies have been primarily absorbed by the Union Authorities,” an official assertion mentioned. The assertion famous that the rise within the costs of DAP & its uncooked materials within the final one yr is round 80%.

An inter-ministerial committee lately advisable revision of nutrient-based subsidy charges for vitamins similar to nitrogen, phosphorus, potassium and sulphur for kharif 2022 based mostly on common international costs of fertilizers in March 2022.

In line with the ministry information, imported urea costs have risen by greater than 145% to $930 a tonne in April 2022 from $380 a tonne a yr in the past. Equally, costs of DAP and MoP have risen by 66% and 116% to $924 a tonne and $590 a tonne in April 2022, respectively, in comparison with the year-ago interval.

It will be the third yr in a row in 2022-23 that the annual Finances spending on fertiliser subsidy will likely be a lot above the Rs 1-trillion mark, towards a decrease vary of about Rs 70,000-80,000 crore previously few years.

The official mentioned that the futures costs of imported fertiliser may rely on the Russia-Ukraine battle, which has disrupted the provides of DAP and MoP.

Nonetheless, fertilizer ministry officers have said that there won’t be any fertilizer scarcity within the upcoming kharif sowing season. “In case the Ukraine-Russia battle persists, there might be a scarcity of fertiliser within the rabi sowing season,” an official mentioned.

In line with official estimates, towards fertiliser requirement of 35.43 million tonne (MT) in the course of the 2022 kharif season, availability could be 48.55 MT, together with 10.47 MT of imported fertiliser and 25.47 MT of domestically produced soil vitamins.

 Within the case of urea, farmers pay a set value of Rs 242 per bag (45 kg) which covers about 20% of the price of manufacturing, the stability is supplied by the federal government as subsidy to fertiliser models.

India meets about 75-80% of the amount of consumption of urea from home manufacturing whereas the remaining is imported from Oman, Egypt, the UAE, South African and Ukraine.

Practically half of its DAP necessities are imported through (primarily from West Asia and Jordan) whereas the home MoP demand is met solely by means of imports (from Belarus, Canada and Jordan, and many others).

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