As compensation for selling its fertilizer products below market prices, India is likely to provide fertilizer companies with additional funds of Rs 28,600 crore ($3.8 billion) in the near future.
This week, the cabinet may approve enhancements to subsidies for winter-sown crops under the leadership of Prime Minister Narendra Modi. Di-ammonium phosphate will now be subsidised at Rs 1,650 per bag instead of Rs 1,200.
A government mandate was issued to companies instructing them not to raise the retail price for some fertilizers, which will result in no price change for farmers. No comment was available from the ministry of finance.
In the past year, new laws that allow private companies to buy agricultural produce directly have faced massive backlash from farmers. The ruling Bhartiya Janata Party is keen to gain the support of farmers. The farmers are concerned that the government’s guaranteed crop purchase mechanism will be replaced by these new rules. Modi’s party will need their support to win key state elections next year.
In addition, the proposal is to partially compensate for the increase in international prices of DAP, nitrogen, phosphorus, and potassium fertilizers.
Over Rs 1 lakh crore will be spent on fertilizer subsidies in the current year, up from Rs 80,000 crore in the February central budget.
