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Government Expects 30-34% Decline in Fertiliser Subsidy Bill Amidst Global Price Drop

The reduced global prices and decreased urea imports contribute to a substantial reduction in the government's fertiliser subsidy bill, ensuring ample stocks and minimal impact from Red Sea tensions.

KJ Staff
Urea imports are projected to be 40-50 lakh tonnes for the current fiscal year. (Picture Courtesy: Pexels)
Urea imports are projected to be 40-50 lakh tonnes for the current fiscal year. (Picture Courtesy: Pexels)

The government anticipates a decline of 30-34 percent in the fertiliser subsidy bill for the current fiscal year, plummeting to Rs 1.7-1.8 lakh crore. Dr Mansukh Mandaviya, the Minister of Fertilisers, attributed this decline to the reduction in global prices and a decrease in urea imports. Despite rising geopolitical tensions around the Red Sea, Dr Mandaviya assured the public that India's fertiliser availability remains unaffected, with ample stock in place.

Global Factors Impacting Subsidy

The fertiliser subsidy bill, which soared to Rs 2.56 lakh crore in the previous fiscal year due to the Russia-Ukraine war, is expected to witness a significant reduction this year. The current estimate of Rs 1.7-1.8 lakh crore reflects the government's proactive measures to counterbalance falling global prices without increasing retail prices.

Urea imports are projected to be 40-50 lakh tonnes for the current fiscal year, a notable decrease from the previous year's 75 lakh tonnes. This reduction is attributed to higher domestic production and the successful implementation of nano-liquid urea. Presently, India boasts substantial stocks, including 70 lakh tonnes of urea, 20 lakh tonnes of DAP, 10 lakh tonnes of Muriate of Phosphate, 40 lakh tonnes of NPK, and 20 lakh tonnes of Single Super Phosphate.


Geopolitical Tensions and Production Boost

The recent escalation of geopolitical tensions around the Bab-el-Mandeb Strait has raised concerns about fertiliser prices and shipping times. Despite these challenges, Mandaviya revealed that four urea plants have been revitalised, and a fifth is set to commence production shortly. The government is actively promoting alternative fertilisers such as nanoliquid urea and nanoliquid DAP to mitigate supply chain disruptions.

To ensure a stable supply chain, the government has entered into long-term supply agreements with global suppliers, securing assured imports of fertilisers and raw materials at pre-determined prices. Additionally, the Centre is driving initiatives to promote the use of alternative fertilisers and has launched a scheme incentivising states to reduce reliance on chemical fertilisers.

In response to questions about the fertiliser subsidy, Mandaviya reiterated that the subsidy bill is expected to be around Rs 1.7-1.8 lakh crore this year. He emphasised that the government's commitment to maintaining retail prices without compromising farmer interests, even in the face of global price fluctuations during the previous fiscal year.

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