The Centre will soon announce the nutrient-based fertiliser subsidy for the rabi season, which may see some increase from the rates announced for the kharif season as companies had already imported the required quantity to ensure sufficient availability during sowing season. The Department of Fertilisers is believed to have sent its recommendation on the NBS subsidy for rabi season for the approval of cabinet after inter-ministerial consultation.

The government in April had announced the Nutrient Based Subsidy (NBS) rates for Phosphatic (P) and Potassic (K) fertilizers for the kharif season (to be valid during April-September) with an estimated outgo of ₹60,939.23 crore, including support for indigenous fertiliser (SSP) through freight subsidy and additional support for indigenous manufacturing and imports of Di-ammonium phosphate (DAP).

The subsidy rate was ₹91.96/kg for nitrogen (N), ₹72.74/kg for P and ₹25.31/kg for K during kharif. But as the global fertiliser rates fluctuated after April, the government had assured fertiliser firms to keep importing for rabi season so that there is no scarcity in domestic market, particularly of DAP and Muriate of Potash (MOP).

Average import price

The average import price of urea in August was $593/tonne, down from $722/tonne in May and that of DAP was $891/tonne in August against $936/tonne in May and $945/tonne in July. However, MOP has been constant at $590/tonne since March 2022.

The fertiliser industry has conveyed to the government that since the current sales are happening from stock contracted for import before August, the subsidy for rabi season should reflect that aspect and the current decline in global prices at which import contract will be signed should be factored in next revision of subsidy for kharif 2023, sources said.

Decision on urea

“If the government wants companies to keep importing and selling at the unofficial MRP, there has to be some upward revision, at least ₹79/kg in P and ₹27-28 in K,” said an industry official who had participated in the stakeholders’ consultation meeting with Fertiliser Ministry. Regarding urea, he said, the government has to take a call as it takes the entire burden of subsidy and there has been an increase in gas price, the main feedstock to produce nitrogen.

Though the government policy is for a fixed subsidy for P&K and allows freedom to companies to fix the retail prices based on import costs, there has been an unofficial cap on MRP of DAP at ₹1,350/bag (of 50 kg) and MOP at ₹1,700/bag, sources said. The subsidy on DAP has also been substantially increased in the last two years to ensure farmers get it at the same rate.

Fertiliser subsidy during the first five months of the current fiscal has reached ₹61,449 crore — urea at ₹47,790, P&K at ₹13,659 crore whereas the Budget Allocation is of ₹1.05 lakh crore — urea at ₹63,222.32 crore and P&K at ₹42,000 crore.

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