Centre hikes fertiliser subsidy by 140% amid criticism from Opposition

To give relief to farmers from rising fertiliser prices, Prime Minister Narendra Modi on Wednesday decided to increase the subsidy for Di-ammonium Phosphate (DAP).

The PM, who chaired a meeting with the Ministry of Agriculture and Fertilizers officials, decided that farmers will get a bag of DAP for Rs 1,200 instead of Rs 2,400.

This means farmers will get fertiliser at the old rate despite a hike in international prices for raw materials. The government will absorb the hike and will spend additional Rs 14,775 crore towards this subsidy during the coming Kharif season.

"A historic decision was taken to increase the subsidy for DAP fertiliser from Rs 500 per bag to Rs 1,200 per bag, which is an increase of 140 per cent. Thus, despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs 1,200 and the central government has decided to bear all the burden of price hike. The amount of subsidy per bag has never been increased so much at once," said a statement from the Fertilizer Ministry.

Unlike urea, P&K fertilisers are decontrolled products. The prices are fixed by the manufacturers and the government gives them fixed subsidies each year. For the current fiscal year, subsidies for P&K fertilisers have been kept unchanged.

However, for the last few months, the international prices of raw materials of DAP and other P&K fertilisers have increased sharply. Prices of finished DAP in the international market have also risen proportionately.

Opposition parties have been attacking over the rise in fertiliser prices and demanded to increase the subsidy amount immediately.

Last year, the actual price of DAP was Rs 1,700 per bag. In which the Central Government was giving a subsidy of Rs 500 per bag. So the companies were selling fertiliser to farmers for Rs 1,200 per bag.

Recently, the international prices of phosphoric acid, ammonia, etc. used in DAP have gone up by 60 per cent to 70 per cent. So the actual price of a DAP bag is now Rs 2,400, which could be sold by fertiliser companies at Rs 1,900 after considering a subsidy of Rs 500. With today's decision, farmers will continue to get a DAP bag for Rs 1200, said the statement.

"The PM remarked that his Government is committed to the welfare of farmers and will take all efforts to ensure that farmers do not have to face the brunt of price-rise," the statement said.

The Central Government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year. With the increase in subsidy in DAP, the Government of India will spend an additional Rs 14,775 crore as subsidy in Kharif season, said the statement.