Govt considering Rs 28,600 cr increase in fertiliser subsidy: Report

India is likely to provide additional Rs 286 billion ($3.8 billion) to fertilizer companies as compensation for selling products at lower than market prices to farmers, people with the knowledge of the matter said.

A cabinet meeting chaired by Prime Minister Narendra Modi may approve the enhanced subsidy for winter-sown crops as early as this week, the people said, asking not to be identified as the matter is not public. The fixed subsidy on of Di-ammonium Phosphate is being raised to 1,650 rupees per bag from 1,200 rupees now.

There will be no price change for farmers, the people said, as the move follows a government directive to companies asking them not to increase retail price of some fertilizers. A finance ministry spokesperson was not available for a comment.

The ruling Bhartiya Janata Party is keen to win over farmers after facing massive backlash for the past year over new laws that allow the private businesses to procure agricultural produce directly. The farmers fear the new rules will replace the government’s guaranteed crop purchase mechanism. Their support will be crucial for Modi’s party to win key state polls next year.

The proposal is also to partly offset the increase in international prices of DAP and nitrogen, phosphorus and potassium fertilizers.

The increased fertilizer subsidy in the current financial year will boost spending to over 1 trillion rupees from 800 billion rupees allocated in the federal budget unveiled in February.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor