The Centre on Wednesday hiked the subsidy on diammonium phosphate (DAP) fertiliser by 140 per cent to protect the farmers from increase in price of fertilisers.
The subsidy on DAP fertiliser has been increased to Rs 1,200 per bag from Rs 500 per bag. The decision will cost the exchequer Rs 14,775 crore, in addition to the Rs 80,000 crore spent annually on fertiliser subsidy to farmers.
The decision was taken during a high-level meeting chaired by Prime Minister Narendra Modi on the issue of fertiliser prices.
"It was discussed that the price of fertilisers is undergoing an increase due to the rising prices of phosphoric acid, ammonia, etc internationally. PM stressed that farmers should get fertilisers at old rates despite the international rise in prices," the Prime Minister's Office said in a statement.
Last year, the actual price of DAP was Rs 1,700 per bag. After Centre's subsidy of Rs 500 per bag, the companies were selling fertiliser to farmers for Rs 1,200 per bag.
"Recently, the international prices of phosphoric acid, ammonia, etc used in DAP have gone up by 60 per cent to 70 per cent. So the actual price of a DAP bag is now Rs 2,400, which could be sold by fertiliser companies at Rs 1,900 after considering a subsidy of Rs 500. With today's decision, farmers will continue to get a DAP bag for Rs 1,200," the statement said.
The government is committed to the welfare of farmers and will make all efforts to ensure that they do not have to face the brunt of price rise, the prime minister said during the meeting.
Earlier on Friday, the Centre had transferred Rs 20,667 crore to farmers' account under the PM-KISAN scheme. The decision to hike fertiliser subsidy comes at a time when the government is facing protests in Punjab and Haryana over the three farm related bills passed by the Parliament last year.
While the government claims that the new laws will liberalise farming in the country and increase farmers' income, farm groups, mainly from Punjab and Haryana, have been opposing them, claiming the laws would hurt farmers and benefit big corporates.
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