The impact of the fall of urea and DAP imports, the government’s costs on fertilizer subsidy have declined

The cost of providing cheap (subsidized) fertilizer to farmers was 6 per cent to Rs 1,77,129.5 crore in the last fiscal, compared to Rs 1,88,291.62 crore in 2023-24.
This decline is mainly due to the fall of urea and Diamond phosphate (DAP) imports and decline in international prices.

Despite this collapse, the actual subsidy was 3.4 per cent higher than the Rs 1,71,310 crore paid in the budget (revised rating). The government estimates the fertilizer subsidy for the fiscal year 2025-26 at around 1.68 lakh crore, Rs 1.19 lakh crore per urea and Rs 49,000 crore for phosphate and potash.

According to the latest official data on the actual subsidy based on sales, the subsidy for urea on 25 fiscal year increased by 1 per cent to Rs 1.24 lakh crore, which was Rs 1.23 lakh crore in Fi 24. Meanwhile, the subsidy on phosphoric and potash fertilizer is Rs.

The right decision of the government

The former Agriculture Secretary said, “This is the right decision to reduce the subsidy, because after petroleum, the next part of the fertilizer is likely to reduce government costs.” He said the government could not touch the food subsidy, even if the government had to review its growth a few years later.

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When the potash subsidy was reduced from Rs. 20 to Rs.

Sources said that the fertilizer ministry is considering launching a pilot campaign in selected districts, which has formed a constituency. However, this has not yet been discussed with the industry.

The Ministry of Agriculture has already shared the Prime Minister Kisan, the Prime Minister’s Crop Insurance Scheme, the Soil Health Card and every Farmer with the Ministry of Fertilizer.

Fertilizer DPD

Currently, the direct benefit of fertilizer subsidy (DPD) applies nationwide, which has been launched in 2018. In this, the farmer is given fertilizer by the retailer at subsidized prices through POS machines. In this, farmers do not have the direct benefit of the subsidy, but farmers have to pay a standard rate. Based on sales, 100 percent of the subsidy is paid to manufacturing companies.

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The sales price of urea on the basis of subsidized urea has continued for the past several years in a bag of Rs. Similarly, DAP’s retail price is fixed at 3 1,350, which will be about 3,500/bag without subsidy.

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