Government Cuts Subsidy on Non-Urea Fertilizers; Rs 22,187 Crore will be Given for FY 2020-21

The Centre has cut the subsidy on non-urea fertilisers, to reduce the burden on the exchequer to Rs 22,186.55 crore for FY21 during the COVID-19 lockdown. This decision was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) which was headed by PM Narendra Modi.

Prakash Javadekar, Minister of Information & Broadcasting said, “The CCEA has given its approval for fixation of nutrient-based subsidy (NBS) rates for phosphatic & potassic (P&K) fertilisers for the year 2020-21. The expected expenditure for release of subsidy on P&K fertilisers during 2020-21 will be Rs 22,186.55 crore.”

The fertiliser ministry has said in a statement, the nitrogen subsidy has been reduced to Rs 18.78 per kg, phosphorous Rs 14.88 per kg, potash Rs 10.11 per kg & sulphur Rs 2.37 per kg for the present financial year.

For 2019-20, the subsidy for nitrogen was fixed at Rs 18.90 per kg, phosphorous at Rs 15.21 per kg, potash at Rs 11.12 per kg & sulphur at Rs 3.56 per kg. The expected expenditure was Rs 22,875 crore in year 2019-20.

Adding to it, the CCEA has also approved the inclusion of a complex fertiliser called ammonium phosphate (NP 14:28:0:0) under the NBS scheme. In the year 2010, the government has started the nutrient-based subsidy (NBS) programme. Under it, a fixed amount of subsidy, decided on an annual basis, is given on each grade of subsidised phosphatic & potassic (P&K) fertilisers, except for urea, based on the nutrient content present in them.

The retail prices of non-urea fertilisers like Di-ammonium Phosphate (DAP), Muriate of Potash (MoP) and NPK are decontrolled. They are determined by manufacturers, while Centre provides a fixed subsidy each year.

The government is also making available fertilisers, such as urea & 21 grades of P&K fertilisers to farmers at subsidised prices via manufacturers or importers. For urea, the MRP (maximum retail price) are fixed by the government. The difference between the production cost & the MRP is reimbursed to manufacturers.