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By Online Desk
The government’s fertilizer subsidy bill — one of the biggest subsidy items in the Union budget — jumped by a whopping 62% during the last financial year to Rs 2.55 lakh crore, according to numbers disclosed by the union ministry of Chemicals and Fertilizers today.
This marks the steepest increase in the fertilizer subsidy bill in recent years and was caused by the Russia-Ukraine war. India imports key fertilizer ingredients from abroad, and Ukraine and Russia are key suppliers of fertilizers to the world.
The figure of Rs 2.55 lakh crore for the financial year 2022-23 is higher than the government’s previous estimates of 2.25 lakh crore for last year. In the preceding year, the number was 1.58 lakh crore.
With this, the fertilizer subsidy has reached a size comparable to the food subsidy bill and is several times the size of the petroleum subsidy.
For comparison, the food subsidy bill for the last financial year is estimated at 2.87 lakh crore, while the petroleum subsidy bill for last year is estimated at close to around Rs 10,000 crore.
The government has been reducing the subsidy on petroleum products, including LPG, but has not touched the fertilizer subsidy.
The latest numbers indicate that the government massively overshot its total subsidy budget for last year. It had pegged the total subsidy budget at just Rs 3.55 lakh crore for the year ended March, but the number is now likely to be around 5.5-6.0 lakh crore.
Under India’s fertilizer subsidy regime, urea is provided to farmers at a statutorily notified maximum retail price of Rs 242 for a 45 kg bag per bag, excluding neem-coating and tax expenses.
The difference between the delivered cost of urea at the farm gate and net market realization by the urea units is given as a subsidy to the urea manufacturer/importer by the Government of India.
In respect of potassium and phosphate fertilizers, India has a nutrient-based subsidy policy, under which a fixed amount of subsidy is provided on P&K fertilizers depending on their nutrient content. Under this policy, MRP is fixed by fertilizer companies as per market dynamics “at reasonable levels” which is monitored by the Government.
Earlier this year, during the Budget, Finance Minister Nirmala Sitaraman allocated 1.75 lakh crore for fertiliser subsidies for the ongoing financial year.
According to the budget statement, this is one of the biggest expenditures by the government for the fiscal year.
While answering questions during the monsoon session of Parliament, Minster for Fertilizers said that the government of India has ensured the availability of fertilizers at reasonable prices by increasing the quantum of subsidies.
It was also stated that the government also facilitated long-term agreements and joint ventures to ensure an adequate supply of fertilizers.
According to the Ministry, Urea is provided to the farmers at a statutorily notified maximum retail price. The MRP of a 45 Kg bag of urea is Rs. 242 per bag (exclusive of charges towards neem coating and taxes as applicable). The difference between the delivered cost of urea at the farm gate and net market realization by the urea units is given as a subsidy to the urea manufacturer/importer by the Government of India. Accordingly, all farmers are being supplied urea at subsidized rates.
In respect of P&K Fertilizers, the Government has implemented a Nutrient Based Subsidy Policy w.e.f. 1.4.2010 for Phosphatic and Potassic (P&K) Fertilizers. Under the policy, a fixed amount of subsidy decided on an annual/semi-annual basis, is provided on subsidised P&K fertilizers depending on their nutrient content. Under this policy, MRP is fixed by fertilizer companies as per market dynamics at a reasonable level which is monitored by the Government. Accordingly, any farmer who is buying these fertilizers is getting the benefits of a subsidy.
Earlier this year, during the Budget, Finance Minister Nirmala Sitaraman allocated 1.75 lakh crore for fertiliser subsidies for the next financial year, and this is lower than the revised estimate for fertiliser subsidy spending of 2.5 lakh crore for this year.
The government’s fertilizer subsidy bill — one of the biggest subsidy items in the Union budget — jumped by a whopping 62% during the last financial year to Rs 2.55 lakh crore, according to numbers disclosed by the union ministry of Chemicals and Fertilizers today.
This marks the steepest increase in the fertilizer subsidy bill in recent years and was caused by the Russia-Ukraine war. India imports key fertilizer ingredients from abroad, and Ukraine and Russia are key suppliers of fertilizers to the world.
The figure of Rs 2.55 lakh crore for the financial year 2022-23 is higher than the government’s previous estimates of 2.25 lakh crore for last year. In the preceding year, the number was 1.58 lakh crore.googletag.cmd.push(function() {googletag.display(‘div-gpt-ad-8052921-2’); });
With this, the fertilizer subsidy has reached a size comparable to the food subsidy bill and is several times the size of the petroleum subsidy.
For comparison, the food subsidy bill for the last financial year is estimated at 2.87 lakh crore, while the petroleum subsidy bill for last year is estimated at close to around Rs 10,000 crore.
The government has been reducing the subsidy on petroleum products, including LPG, but has not touched the fertilizer subsidy.
The latest numbers indicate that the government massively overshot its total subsidy budget for last year. It had pegged the total subsidy budget at just Rs 3.55 lakh crore for the year ended March, but the number is now likely to be around 5.5-6.0 lakh crore.
Under India’s fertilizer subsidy regime, urea is provided to farmers at a statutorily notified maximum retail price of Rs 242 for a 45 kg bag per bag, excluding neem-coating and tax expenses.
The difference between the delivered cost of urea at the farm gate and net market realization by the urea units is given as a subsidy to the urea manufacturer/importer by the Government of India.
In respect of potassium and phosphate fertilizers, India has a nutrient-based subsidy policy, under which a fixed amount of subsidy is provided on P&K fertilizers depending on their nutrient content. Under this policy, MRP is fixed by fertilizer companies as per market dynamics “at reasonable levels” which is monitored by the Government.
Earlier this year, during the Budget, Finance Minister Nirmala Sitaraman allocated 1.75 lakh crore for fertiliser subsidies for the ongoing financial year.
According to the budget statement, this is one of the biggest expenditures by the government for the fiscal year.
While answering questions during the monsoon session of Parliament, Minster for Fertilizers said that the government of India has ensured the availability of fertilizers at reasonable prices by increasing the quantum of subsidies.
It was also stated that the government also facilitated long-term agreements and joint ventures to ensure an adequate supply of fertilizers.
According to the Ministry, Urea is provided to the farmers at a statutorily notified maximum retail price. The MRP of a 45 Kg bag of urea is Rs. 242 per bag (exclusive of charges towards neem coating and taxes as applicable). The difference between the delivered cost of urea at the farm gate and net market realization by the urea units is given as a subsidy to the urea manufacturer/importer by the Government of India. Accordingly, all farmers are being supplied urea at subsidized rates.
In respect of P&K Fertilizers, the Government has implemented a Nutrient Based Subsidy Policy w.e.f. 1.4.2010 for Phosphatic and Potassic (P&K) Fertilizers. Under the policy, a fixed amount of subsidy decided on an annual/semi-annual basis, is provided on subsidised P&K fertilizers depending on their nutrient content. Under this policy, MRP is fixed by fertilizer companies as per market dynamics at a reasonable level which is monitored by the Government. Accordingly, any farmer who is buying these fertilizers is getting the benefits of a subsidy.
Earlier this year, during the Budget, Finance Minister Nirmala Sitaraman allocated 1.75 lakh crore for fertiliser subsidies for the next financial year, and this is lower than the revised estimate for fertiliser subsidy spending of 2.5 lakh crore for this year.
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