Fertiliser subsidy is up hefty 140%

In what is being hyped as a ‘historic’ decision, farmers will get a subsidy of 1,200 per bag of fertiliser, instead of the current 500, even though it will drain the exchequer by an additional Rs 14,775 crore.

The decision to hike the subsidy was taken at a highlevel meeting chaired by the Prime Minister on Wednesday evening. The Prime Minister stressed that farmers "should get fertilisers at old rates" despite the international rise in prices, the statement read.

The whopping 140 per cent increase in subsidy will serve to offset the price rise in international market, the Prime Minister's office said, underscoring that farmers "should get fertilisers at old rates." So, instead of 2,400 -which is what the price is working out to following the rise in global prices -- the farmers will continue to get a bag of DAP (Di-ammonium Phosphate) for 1,200.

The welfare of farmers is at the core of government's efforts, the PMO statement further said.

DAP is the most widely consumed fertiliser in India after urea. Last year, the actual price of DAP was Rs 1,700 per bag.

The Central government was giving a subsidy of Rs 500 for every bag and hence, companies were selling the same to farmers for Rs 1,200. Recently, the international prices of phosphoric acid, ammonia etc used in DAP have gone up by 60% to 70%. Hence, the actual price of a DAP bag is now Rs 2,400, but the government decision to hike the subsidy will help farmers to continue buying each DAP bag at Rs 1,200.

The government spends about Rs 80,000 crore on subsidies for chemical fertilisers ever y year.