The Centre on Wednesday increased its share of subsidy for di-ammonia phosphate (DAP) by 140 per cent from Rs 500 to Rs 1,200 per bag, thereby rolling back the steep 58 per cent hike in prices announced by companies since April. The decision taken at a meeting chaired by Prime Minister Narendra Modi comes in the backdrop of farmers’ agitation.
A government statement said the Centre would spend an additional Rs 14,775 crore on fertiliser subsidy in the current financial year. It usually incurs a subsidy of around Rs 80,000-85,000 crore on fertiliser every year.
In the last few months, all major fertiliser companies including the biggest player Iffco had hiked DAP rates along with prices of other complex fertilisers. This followed a 60 to 70 per cent rise in international prices of phosphoric acid and ammonia, which are key components for DAP.
Data shows that the landed price of imported DAP was around $383 per tonne in February. The price rose to around $515 per tonne (CFR) in April, an increase of 35 per cent in about three months, resulting in farmers’ protest. Along with the steep hike in diesel rates, the higher price of DAP would have raised the input costs significantly.
In some crops such as soybean, some estimates said the input cost would have risen by Rs 1,400-2,000 per hectare due to the increase in DAP prices.
In April 2020, the union government had fixed the rates of nutrient-based subsidy for phosphatic and potassic fertilisers for 2020-21 at Rs 18.78 per kg for nitrogen, Rs 14.88 per kg for phosphorus, Rs 10.11 per kg for potash and Rs 2.37 per kg for sulphur.
This was maintained in April 2021.
The Centre has been trying to impress upon fertiliser companies to not pass on the impact of high input costs to farmers and hold back their hike in DAP rates, but it didn’t work. Iffco had decided to sell only its old DAP stocks at old rates.
Earlier in the day, Union Chemicals and Fertiliser Minister D V Sadananda Gowda had assured NCP chief Sharad Pawar that a decision on roll-back of the hike in fertilizer prices would be taken within two days. Pawar had written a letter to Gowda demanding a roll back of DAP prices.
Congress had also attacked the government over the issue, citing an additional burden of Rs 20,000 crore on farmers.
Party leader Rahul Gandhi said the government had increased the prices of fertiliser, petrol and diesel, and lowered agri subsidies and income of farmers.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU