Even as paddy sowing is lagging behind last year’s level, the consumption of urea, the main fertiliser for the cereal crop, has increased by 25 per cent during the first quarter of the current fiscal as the Centre continues its sales at a highly subsidised rate, unchanged since 2012.

Overall fertiliser sales were 142.99 lakh tonnes (lt) during April-June this fiscal, up 21 per cent from 117.98 lt a year-ago, official data show. Urea sales have jumped to 84.26 lt from 67.45 lt and di-ammonium phosphate (DAP) increased by 70 per cent to 31.76 lt from 18.7 lt. On the other hand, sales of muriate of potash (MoP) were down by 20 per cent at 4.14 lt and of complex fertiliser (combination of N, P, K nutrients) by 14 per cent at 22.83 lt.

Base effect

“The increase in DAP is mainly due to base effect as there was a severe supply crisis of it last year, though the government claiming ample availability. But the urea consumption shows that farmers are unwilling to accept the balanced use of fertiliser as promoted by the government since it is not only the cheapest, but there is a wide gap between urea and other fertilisers,” said a former official of the Fertiliser Association of India. The government should consider narrowing the gap gradually, without increasing the subsidy burden, he suggested.

The area under paddy, which was 19 per cent lower until July 22, continues to trail with the deficit in the acreage continuing last week too. According to iGrain, the coverage as of July 22 was 170.58 lakh hectares (lh) against 209.21 lh a year ago.

The government’s annual fertiliser subsidy bill is likely to be around ₹2.5 lakh crore during this fiscal because of high international prices, against the Budgetary provision of ₹1,05,222.32 crore for FY23. Because of the global price rise, India’s fertiliser subsidy bill increased to ₹1,40,122.32 crore in Revised Estimates for 2021-22 from ₹79,529.68 crore (Budget Estimate).

Plugging leakages

The Centre provides urea at a highly subsidised rate of ₹266 per bag (of 45 kg) to farmers. It has to bear a subsidy of over ₹2,700 per bag. For the current kharif season, the subsidy on nitrogen (N) was hiked to ₹91.96 per kg from ₹18.78/kg last season. A bag of urea contains 46 per cent nitrogen.

Farmers pay ₹1,350 for DAP and ₹1,700 for MOP (for 50 kg bag), even as the government enhanced subsidy on phosphorous to ₹72.74/kg in kharif 2022 from ₹45.32/kg last year. For potash, it was increased to ₹25.31/kg from ₹10.11/kg.

The government recently said it has identified leakages worth ₹100 crore through various covert operations in the last two-and-a-half months in urea sales.

It is estimated that the annual requirement of technical-grade urea for industrial usage is around 13-14 lt, out of which only 1.5 lt are produced in the country. The industry imports only 2 lt, as against the required level of more than 10 lt which too indicates large scale diversion of agricultural urea, estimated to be about ₹6,000 crore.

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