Govt extends additional subsidy package of up to Rs 3,850 crore for DAP fertiliser

The first Union cabinet meeting of 2025, chaired by Prime Minister Narendra Modi on Wednesday, took a decision to extend a one-time package to subsidise key fertiliser DAP at the cost of up to Rs 3,850 crore and approved a one-year extension of two crop insurance schemes.

On social media platform X, the Prime Minister said, "(Govt's) first decision of the New Year is dedicated to crores of farmer brothers and sisters of our country. We have approved increasing the allocation for the crop insurance scheme. This will provide more security to farmers' crops and will also mitigate their concerns about any damage".

While approving the continuation of the to the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) until FY26 and the crop-insurance outlay, the government also announced the creation of a Fund for Innovation and Technology (FIAT) worth Rs 824.77 crore, Union Agriculture Minister Shivraj Singh Chouhan told reporters here after the cabinet meeting.

PMFBY and(RWBCIS have been extended to align it with the 15th Finance Commission period.

The total outlay for PMFBY and RWBCI has been enhanced to Rs 69,515.71 crore for 2021-22 to 2025-26, higher from Rs 66,550 crore for 2020-21 to 2024-25.

To prevent human intervention to identify crop damage, the government has decided to use remote sensing technology.

To date, crop insurance has been provided to four crore farmers, the minister said, adding that 88% of these are small and marginal farmers. About Rs 1.7 trillion has been disbursed as insurance payouts under the scheme in the past eight years, the Minister said.

He said 12 per cent per year penalties imposed on insurers who delay the disbursal of claims, he said.

In another big decision, the Union Cabinet extended an additional subsidy on di-ammonium phosphate (DAP) beyond December 31, 2024, to help maintain retail prices of this key fertiliser at Rs 1,350 per bag of 50 kg.

The Cabinet also approved the proposal for an extension of a one-time special package on DAP at the rate of Rs 3,500 per tonne for the period from January 1, 2025, till further orders.

Farmers will continue to get DAP at Rs 1,350 per bag and the extra burden will be borne by the central government, Union Agriculture Minister Shivraj Singh Chouhan.

Last year, the Centre announced a one-time special package on DAP at Rs 3,500 per tonne, valid from April 1, 2024, to December 31, 2024, with a financial implication of Rs 2,625 crore to keep prices under check. The package was over and above the nutrient-based subsidy (NBS) fixed by the government on non-urea nutrients.