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CCEA increases subsidy on DAP, other fertilisers to aid farming industry

CCEA increases subsidy on DAP, other fertilisers to aid farming industry

This is a special onetime package to offset the impact of the increased international prices of the fertiliser.

The hike in prices shall be rolled over for FY22 from October 1, 2021 to March 31, 2022 The hike in prices shall be rolled over for FY22 from October 1, 2021 to March 31, 2022

Cabinet Committee on Economic Affairs (CCEA) has increased the subsidy on Diammonium phosphate (DAP) by Rs 438 per bag. This is a special onetime package to offset the impact of the increased international prices of the fertiliser. The government has also raised the subsidy on NPK grade fertilisers (10:26:26, 20:20:0:13 and 12:32:16) by Rs 100 per bag so that farmers can get these fertilisers at pocket-friendly rates.
 
Besides, the committee has also approved the increased prices of phosphatic and potassic fertilisers as per the notification dated May 20, 2021. The hike in prices shall be rolled over for FY22 from October 1, 2021 to March 31, 2022.
 
The Centre has also brought potash derived from molasses (PDM), also known as PDM-0:0:14.5:0, under its Nutrient Based Subsidy (NBS) scheme the first time since 2010 to boost its manufacturing via sugar mills. Till 2020, the government was fixing the subsidy under the Nutrient Based Subsidy (NBS) scheme for 22 varieties of fertilisers having soil nutrients like nitrogen (N), phosphate (P), potash (K), and sulphur (S).
 
With this, the inclusion of PDM takes total fertiliser variants to 25 under the scheme. As per the Ministry of Chemicals and Fertilisers' official release, this move is likely to reduce India’s import dependence of more than 42 LMT of mineral-based potash (MOP) which costs the exchequer around Rs 7,160 crores annually.

“This decision will not only improve the income level of sugarcane growers and sugar mills but also offer Rs 73 subsidy per 50kg bag being sold at Rs 600-800 by Fertiliser Companies to farmers. It is expected that the Union Government will spend Rs 156 crores (approximately) annually as subsidy on PDM and save a foreign exchange of Rs 562 crores,” the release said.
 
Rating agency ICRA has called the Rs 28,655 crore fertiliser subsidy a ‘positive’ step ahead of the rabi season. “The step is positive for the farmers and the industry as it will ensure farmers get access to fertilisers at a reasonable retail price and the industry also does not face losses on account of the elevated international prices of fertilisers and key inputs,” the agency was quoted by PTI as saying.

Edited by Mehak Agarwal; with PTI inputs

Also read: September WPI inflation eases to 10.66% on lower food prices