Govt to revise fertilizer subsidy to cool prices to farmer 

Fertilizer department said in the presentation that international prices of fertilizers and raw materials have been constantly rising since January 2021. “An inter-ministerial committee recommended revision of nutrient-based subsidy rates for nutrients nitrogen, phosphorous, potassium and sulphur for kharif 2022 based on average international prices of fertilzers in March 2022 as a special case this year… Cabinet approval on nutrient based subsidy rates for kharif 2022 is awaited,” showed the presentation made at the National Conference on Agriculture for Kharif Campaign 2022-23 organised by the agriculture ministry on Tuesday. 

Assurance of revised subsidy in line with the surge in global prices is expected to calm the market. Once announced, the new subsidy rates will be applicable from 1 April, the presentation shared by the agriculture ministry showed.  

In the case of non-urea fertilizers like phosphorous and potash, the subsidy component is fixed, which means that unless the subsidy is increased, an increase in cost would translate to the retail price paid by the farmer.  

Industry executives said that announcing the new subsidy rates in time would be vital for importers to tie up contracts. Besides, even though phosphorous and potash fertilizer prices are ‘decontrolled,’ often, policy makers expect businesses to maintain prices steady in times of volatility, which makes it important for announcing the subsidy rates in time.  

“However, kharif demand picks up during July-August and there is still time,” said an industry executive who asked not to be named. Reduction in phosphorous exports from China had contributed to a price surge globally even before the Russia-Ukraine war, which got aggravated subsequently, said the executive. 

While an increase in the subsidy rates will push up the Centre’s fertilizer subsidy outgo for the current fiscal, estimated at over ₹1 trillion, it is likely to address food inflation. Retail inflation measured by the Consumer Price Index (CPI) has already scaled 6.95% in March, while food inflation touched 7.68%, showed official data. The RBI had said earlier this month that concerns over protracted supply disruptions have rattled global commodity and financial markets, given the significant share of the two economies engaged in war—Russia and Ukraine–in global production and exports of key commodities like oil and natural gas, wheat and corn, palladium, aluminium and nickel,  edible oils and fertilisers. India has already lowered import duty on edible oils to cool local prices.  

Fertilizer supply concerns have come in the backdrop of a heat stress which is affecting North Indian farmers, impacting wheat output.  

The government also sought to assure on Tuesday that there will not be any fertiliser shortage in the upcoming kharif sowing season. Addressing the conference on preparedness for the kharif sowing operation that commences with the onset of the southwest monsoon from June, Fertiliser Secretary RK Chaturvedi highlighted the steps taken by the government to ensure sufficient availability of fertilisers at an affordable price to the farmers, news agency PTI reported. 

“We have made both short and long term arrangements with global suppliers for import of fertilisers. There will not be any shortage of fertilisers during the kharif season,” the report said quoting Chaturvedi. 

The fertilizer department presentation showed that against the total estimated fertiliser requirement of 354.34 lakh tonne during the 2022 kharif season, availability would be 485.59 lakh tonne, including imported and domestically manufactured fertilizer.