Government mulling another hike in fertilizer subsidy

NEW DELHI:  The central government is considering a hike in fertilizer subsidiary again on the back of skyrocketing international prices.

“Rising fertilizer cost has been brought to our notice. The ministry has always supported agriculture sector and is open to another round of hike in subsidy, if required. We are open to all the options,” a senior official in the finance ministry told TNIE. 

According to the sources in the finance ministry, the agriculture department had meetings with both fertilizer ministry and the finance ministry over the recent hike in international price of fertilizers, which has forced them to curtail imports. Citing examples, last year India had imported urea at around $290 per tonne CFR (cost plus freight), which has almost doubled to $510-515 per tonne.

Similarly import cost of di-ammonium phosphate has gone up from $330 to $630 per tonne, ammonia from $205 to $670 per tonne and sulphur from $75 to $210 per tonne. That has resulted in curtailing imports by 20-25%. The hike in their inputs has also effected domestic production and industry sources claim that with lower domestic supply than last year, dependency on imports has increased.

Officials have claimed that while they have cover till this season, there may be supply crunch during rabi season. “The one option is to import at high price and passing on the hike to farmers but with UP and Punjab elections, that option is fraught with political risks, at a time when farmers are at loggerheads with the government. So another hike in subsidy is the only way out,” the official added. Another reason for price hike is that sanction on Belarus and temporary suspension of exports from China has fuelled the cost further.