The Union Cabinet on Wednesday approved a ₹22,303 crore subsidy on phosphorous and potash fertilisers for the current Rabi season, as against ₹51,875 crore allocated in the 2022 Rabi season due to a drop in global rates of crop nutrients. The new rate subsidy for potash (K), fixed at ₹2.38/kg for the current season, is the lowest since 1997, when it was ₹2/kg, industry sources said.

The subsidy for nitrogen (N) will be ₹47.02/kg, ₹20.82/kg for phosphorus (P), and ₹1.89/kg for sulphur (S).

Information and Broadcasting Minister Anurag Thakur said the government is committed to ensuring adequate availability of fertilisers to farmers at affordable prices. He said farmers would continue to get DAP (di-ammonium phosphate) at the same rate of ₹1,350 per 50 kg bag, NPK (complex) at ₹1,470 per bag, and SSP (single super phosphate) at around ₹500 per bag. The MoP (Muriate of Potash) rates will come down to ₹1,655 per bag from ₹1,700 per bag, he added.

Imported urea has fallen to about $400/tonne (CIF) from about $680/tonne in October 2022. DAP has fallen to $595/tonne from $722/tonne a year ago and MoP to $319/tonne from $590/tonne a year ago.

Reduction in subsidies

There has been a drastic reduction in subsidies for potash, which is mainly used in wheat, plantations, and vegetable crops. In Rabi 2022, the subsidy for potash was ₹23.65/kg (Oct-Dec 2022) and ₹15.91/kg for January-March 2023 and the kharif season of 2023–24. The government has been promoting potash derived from molasses (PDM) for farming to reduce its 100 per cent dependence on imports.

“Compared to the fall in global potash rates, the subsidy cut is steep. How the company will price the finished MoP’s selling price in Rabi season will be keenly watched, as it was the only fertiliser that recorded a drop in sales, whereas urea, DAP, and complex reported higher sales during April-August,” said an industry expert, adding MoP consumption has fallen by more than half from what it used to be in 2021–22.

The expert cited the high price as the main reason for the fall in sales, saying a bag of both MoP and DAP used to be sold at the same price to farmers a few years ago. For the last rabi season, the subsidy for nitrogen was ₹98.02/kg, for phosphorus ₹66.93/kg, and for sulphur ₹6.12/kg.