Government Considering Subsidy Rates to Offset Increase in Global Prices of Fertilisers

The government will consider the subsidy rates to offset the increase in global prices of raw materials of phosphatic and potassic (P&K) fertilisers to support farmers. The manufacturers fix the P&K fertiliser prices, and the government provides fixed subsidies on them every year. 

The government ensures the availability of fertilisers, such as urea and P&K fertilisers, including Muriate of Potash (MOP),  Di-ammonium Phosphate (DAP) and Single Superphosphate (SSP) to farmers. The Nutrient Based Subsidy (NBS) scheme has governed subsidies on P&K fertilisers since 1 April 2010. 

The Minister of Chemicals and Fertilizers, Shri. Sadananda Gowda discussed the present NBS regime regarding the P&K category of fertilisers with the Minister of Home Affairs, Shri. Amit Shah, Minister of Finance, Smt. Nirmala Sithraman and Minister of Agriculture and Farmers Welfare, Shri. Narendra Singh Tomar on 13 May. The NBS scheme is a scheme through which the Central Government disburses the subsidy on P&K fertilisers to manufacturers.

There is a global rise in prices for some essential crop nutrients such as DAP and P&K fertilisers, over a 50% rise in prices.  Even though the imports were becoming costly, including DAP, some fertiliser companies increased their prices only last month. The DAP is a crucial input during sowing and essential for farmers.

Millions of farmers are waiting to grow various summer crops from June to September, including paddy, gram, pulses, coarse cereals, etc. The government will consider all the required measures and enhance subsidies to ensure enough stock across the country.

The government is committed to assuring P&K fertilisers’ availability at affordable prices to farmers as per its farmer-friendly approach. The government releases the subsidy to the fertiliser companies according to the NBS rates to make the P&K fertilisers available to farmers at affordable prices.

There is a sharp increase in the international prices of the raw materials of the P&K fertilisers in the last few months. There is also a rise in the prices of the finished DAP etc., in the international market. Despite the increase in the international market, there was no increase by the Indian companies in the DAP prices till last month. However, currently, some companies have increased the DAP prices.

The government is taking steps to tackle the problems of the farming community as it is aware of the concerns of the farmers. The government monitors the prices of fertilisers and takes steps to protect the farmers from the price rise of P&K fertilisers. The government has given directions to the fertiliser companies to ensure sufficient availability of these fertilisers.

The government has asked all the fertiliser companies to sell the old stock of DAP at the old prices. The government considers the subsidy rates to offset the increase in the international prices of raw materials of DAP and P&K fertilisers to support the farmers and reduce their financial burden. The government is monitoring the availability of these fertilisers in the country.

There is an expectation that the government will soon provide revised subsidies to offset the increase in the price rise of P&K fertilisers to help farmers. The government is taking all necessary steps to safeguard the interest of farmers from the COVID-19 pandemic crisis.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in