The Cabinet on Wednesday increased the subsidy rates for nitrogen (N), but cut the support for phosphorus (P), potash (K) and sulphur (S) under the Nutrient-Based Subsidy (NBS) scheme for current rabi season from the rates fixed for the kharif season. Based on the new rates, total cost of subsidy is estimated at ₹51,875 crore for rabi season.
As per the cabinet decision, the subsidy for ‘N’ will be ₹98.02/kg during the rabi season, up from ₹91.96/kg in kharif. However, the official assistance to fertiliser companies for ‘P’ has been reduced to ₹66.93/kg from ₹72.74/kg, that of ‘K’ to ₹23.65/kg from ₹25.31/kg and sulphur to ₹6.12/kg from ₹6.94/kg.
When the NBS subsidy for kharif season was announced in April this year entailing an estimated ₹60,939.23 crore cost to the exchequer, the global average price (f.o.b) of urea was $631/tonne for the month whereas the imported di-ammonium phosphate (DAP) was $924/ tonne (CFR) and muriate of potash (MoP) was $590/tonne (CFR). Now, the average cost of imported urea has increased to $661/tonne, but DAP has fallen to $758/tonne. However, the MOP cost is constant at $590/tonne.
“Subsidy approved by Cabinet for the NBS Rabi-2022 (from October 1, 2022, to March 31, 2023) will be ₹51,875 crore, including support for indigenous fertiliser (SSP) through freight subsidy,” an official statement said. “This will enable smooth availability of all P and K fertilisers to the farmers during rabi 2022-23 at subsidised/affordable prices and support the agriculture sector. The volatility in the international prices of fertilisers and raw materials has been primarily absorbed by the government,” the statement said.
After the cabinet meeting, fertiliser minister Mansukhbhai Mandaviya said that with this revision, the subsidy of urea fertiliser for rabi season has increased to ₹87,000 crore from ₹33,000 crore of budgetary allocation. Similarly, the subsidy for P and K fertilisers in rabi season has gone up to Rs 51,875 crore from Rs 21,000 crore.
“With total subsidy in rabi season increasing to Rs 1.38 lakh crore, the overall fertiliser subsidy bill may touch Rs 2.25 lakh crore against Rs 1.05 lakh crore Budget Estimate for FY 2022-23,” Mandaviya said.
The minister also said the government targets to ensure self sufficiency (Atmanirbhar) in urea before 2025 and there will not be any need to import the fertiliser. Against an annual demand of 350 lakh tonne (lt), the country produces about 250 lt, he said, adding the production will significantly increase (by 63 lt) once all the five closed plants are revived.
Announcing that prime minister Narendra Modi will inaugurate the revived Ramagundam urea plant on November 12, the minister said the Sindri plant will be likely to start production from this month after the Barauni plant got commissioned. Both Sindri and Barauni plants will be inaugurated this month, he added. Besides, the nano-urea will add to meet the overall demand of the crop nutrient, he said. So far, four crore nano-urea bottles (of 500 ml each equivalent to one bag of 45 kg normal urea) have been sold since its launch in August 2021.