Fertilizer Subsidy Increases by 66% Due to Surge in DAP Imports

India's urea imports fell 17% in the 2022–23 fiscal year, the second consecutive decrease, due to an increase in domestic production and the introduction of nano-urea. However, a 30% increase in Di-ammonium Phosphate (DAP) imports necessitates additional policy changes given that the overall fertilizer subsidy increased by 66% to 2,54,800.05 crore last year.

Fall in Urea Imports

As per the latest official data, the import of urea dwindled to 76 lakh tonnes in the last fiscal year from 91.36 lakh tonnes during the year 2021-2022, and that of Muriate of Potash (MoP) to 14 lakh tonnes from 17.68 lakh tonnes.

Director General of the Fertilizer Association of India, Arvind Chaudhary said that there was a rise in the domestic production of urea especially after the revival of plants like Ramagundam. It is natural to see its effect on imports.

Domestic production of DAP (mostly from imported raw materials) which has a share of 38 per cent in its total annual availability, rose 3 per cent to 43.47 lakh tonnes from 42.22 lakh tonnes. Regarding MoP, India imports the whole requirement. When there was a drop in the import of urea and MoP, there was a rise in overseas purchases of DAP by approximately 12 per cent.

Varied Uses

Chaudhary on higher imports of DAP said that both urea and DAP have varied uses and should not be compared. Various factors are responsible for imports like the cost effectiveness of imported materials. The Entire subsidy was not passed on to Single Super Phosphate (SSP) when global prices of rock phosphate rose which became slightly costlier than DAP.

Import and consumption of urea are largely based on availability as it is wholly controlled by the government. In the case of phosphorous and potash, the selling price is these two fertilizers ascertains the consumption. The Maximum amount was used for phosphorous to keep the prices of DAP under control.

The Fertilizer Ministry has determined the subsidy in the present fiscal year to be lower than 1 lakh crore against the budget allocation of 1.75 lakh crore.