Fertiliser subsidy spend to touch Rs 2 trillion in FY23

India’s fertiliser subsidy bills may contact Rs 2 trillion in 2022-23 due to a pointy spike in world costs of urea, di-ammonium phosphate (DAP) and muriate of potash (MoP) within the final one 12 months, an official with the fertiliser ministry mentioned on mentioned.

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

According to the ministry information, imported urea costs have risen by greater than 145% to $930 a tonne in April 2022 from $380 a tonne a 12 months in the past. Similarly, costs of DAP and MoP have risen by 66% and 116% to $924 a tonne and $590 a tonne in April 2022, respectively, comparability to the year-ago interval.

It could be the third 12 months in a row in 2022-23 that the annual Budget spending on fertiliser subsidy will likely be a lot above the Rs 1-trillion mark, towards a decrease vary of about `70,000-80,000 crore up to now few years.

The official mentioned that the futures costs of imported fertiliser may rely upon the Russia-Ukraine battle, which has disrupted the provides of DAP and MoP. “We could see a sharp spike in fertiliser subsidies this fiscal,” the official advised FE.

However, the official said that there is not going to be any fertiliser scarcity within the upcoming kharif sowing season. “In case the Ukraine-Russia conflict persists, there could be a shortage of fertiliser in the rabi sowing season,” an official mentioned.

According to official estimates, towards fertiliser requirement of 35.43 million tonne (MT) throughout 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.

While farmers within the nation proceed to be insulated from the relentless rise in world costs of urea and pure fuel, because the retail costs of the nitrogenous fertiliser are capped and subsidy on it’s open-ended, the surge in DAP and MoP costs within the world markets inflates the farmers’ prices because the subsidy on the 2 merchandise, though excessive, are capped.

In the case of urea, farmers pay a hard and fast worth of Rs 242 per bag (45 kg) which covers about 20% of the price of manufacturing, the steadiness is supplied by the federal government as subsidy to fertiliser items.

With retail costs of DAP and MoP rising steeply since November 2021, the Cabinet is anticipated to announce a pointy enhance within the nutrient-based subsidy (NBS) on these fertilisers this week as a way to cut back the price of the important thing farming inputs to farmers, forward of the kharif sowing season. The new NBS price will likely be relevant from April 1, 2022. In 2021-22, the federal government had twice revised NBS charges for phosphatic fertilisers.

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

Nearly half of its DAP requirement are imported by way of (primarily from West Asia and Jordan) whereas the home MoP demand is met solely by imports (from Belarus, Canada and Jordan, and so on).

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