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India's Fertiliser Subsidy Budget Rapidly Depleted by Global Price Surge
India helps farmers buy fertiliser at low prices by paying part of the cost.
Global fertiliser prices rose sharply after conflict began in West Asia.
This made imported urea and other fertilisers much more expensive for India.
By August 19, the government had already used more than half of its fertiliser subsidy money for the financial year.
Almost all of the money set aside for imported urea had been spent.
The government had stored about 20 million tonnes of fertiliser before the kharif planting season.
Officials may need more money to keep fertiliser prices affordable for farmers.
Urea remains fixed at Rs 267 for a 45-kilogram bag, while DAP costs Rs 1,350 for a 50-kilogram bag.
India spent 58.04% of its FY27 fertiliser subsidy allocation in under five months, or about Rs 99,000 crore by August 19.
Imported urea subsidies used nearly 92.4% of their Rs 36,349 crore allocation, reaching Rs 33,592.41 crore.
Domestic urea production subsidies reached about 51.1% of the reassessed Rs 86,635 crore allocation.
Subsidies for phosphorus and potassium fertilisers reached 39.3% of the Rs 54,000 crore allocation, at Rs 21,256.45 crore.
International urea prices rose to nearly $947 per tonne in May before falling to about $447 from July, increasing procurement costs ahead of kharif sowing.
- Who
- The Indian central government, fertiliser companies, cooperative-sector companies and farmers.
- What
- The government rapidly used its FY27 fertiliser subsidy budget because global urea and other fertiliser costs increased.
- Where
- India, which purchases fertilisers and production inputs in international markets.
- When
- During the first five months of FY27, with spending measured through August 19; international urea prices peaked around May and fell from July.
- Why
- A surge in global fertiliser, raw-material and liquefied natural gas prices followed conflict in West Asia, raising India’s procurement costs while retail prices remained capped.
Key facts
- Subsidy used
- 58.04% of the FY27 fertiliser subsidy budget was spent in under five months.
- Total spending
- Around Rs 99,000 crore had been spent by August 19.
- Imported urea
- Rs 33,592.41 crore, or about 92.4% of the Rs 36,349 crore allocation, had been used.
- Domestic urea
- Rs 44,279.27 crore, or about 51.1% of the reassessed Rs 86,635 crore allocation, had been used.
- P&K fertilisers
- Rs 21,256.45 crore, or about 39.3% of the Rs 54,000 crore allocation, had been used.
- Retail prices
- Urea is sold at Rs 267 per 45-kilogram bag and DAP at Rs 1,350 per 50-kilogram bag.
- Fertiliser stocks
- India held about 20 million tonnes before kharif sowing, equal to nearly 53% of the season’s requirement.
Sources
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