Cabinet hikes DAP fertiliser subsidy by Rs 700 per bag

The hike is part of the government's effort to ensure that farmers gets the key soil nutrient at old rates despite rise in global prices

The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved a Rs 700 per bag hike in subsidy for Di-ammonium Phosphate (DAP) fertiliser for the year 2021-22.

With a rise in global prices, the actual price of DAP reached Rs 2,400 per bag, Minister of State for Chemicals and Fertilizers Mansukh Mandaviya told media persons after a Cabinet meeting. "However, farmers will continue to get DAP at the old rate of Rs 1,200 per bag,” he said, adding that the Centre has decided to increase the subsidy to Rs 1,200 per bag.

One bag of DAP has 50 kilograms of fertiliser.

The increase of subsidy would result in an additional cost of Rs 14,775 crore to the exchequer, he said.

Also Read | Centre hikes fertiliser subsidy by 140% amid criticism from Opposition

Last month, the Centre decided to increase subsidy on DAP fertiliser by 140 per cent. The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi.

Briefing the media, Minister of State for Chemicals and Fertilisers Mansukh Mandaviya on Wednesday said the Cabinet has approved increasing the subsidy amount for DAP fertiliser for the benefits of farmers. The subsidy for DAP fertiliser has been increased to Rs 1,200 per bag from Rs 500 per bag to provide relief to farmers, he said.

Last year, the actual price of DAP was Rs 1,700 per bag, on which the central government was giving a subsidy of Rs 500. The companies were therefore selling the fertiliser to farmers at Rs 1,200 per bag.

Mandaviya said that in the case of urea, the maximum retail price (MRP) is fixed while the subsidy amount keeps changing. On average, he said the government is providing Rs 900 per bag subsidy on urea.