Fertilizer Subsidy

Given the ongoing Russia-Ukraine war, it is likely to throw the Indian government's fiscal calculation off-track concerning agri-commodities such as fertilizers. The government is planning to offer Fertilizer Subsidy to farmers in the country to help them purchase costly fertilizers at a lower price than the prevailing market rate.

Furthermore, the Indian farmers have benefited from Fertilizer Subsidy since the Green Revolution and have become a fundamental component of delivering input help to the farming sector. Keep reading the article below to learn more about a Fertilizer Subsidy in India that will help you prepare for your UPSC prelims and mains examination.

Understanding Fertilizer Subsidy in India

• Under the Fertilizer Subsidy administration, agriculturalists purchase fertilizers at Maximum Retail Prices (MRP). Nevertheless, this Maximum Retail Price is below the average supply-and-demand-based market prices or what it takes to import or produce them.
• While the Maximum Retail Price for Urea is regulated/set by the Indian government, it is decontrolled for other farming fertilizers, including MOP, DAP, and more.
• Urea's MRP (Maximum Retail Price) is presently set at Rs 5,378 per tonne, or a 45-kg bag available at Rs 242. The subsidy is inconsistent since businesses have to market at this regulated price (fixed MRP). It implies subsidy relies upon the market cost or price of Urea. The government of India has to bear the difference between the regulated and market costs.
• In the case of other fertilizers, the government of India exclusively offers a set per-tonne subsidy. It implies the subsidy is set while the MRPs (Maximum Retail Price) vary. Therefore, the MRP of unregulated fertilizers usually remains above Urea MRP and draws a lower subsidy. On the other hand, for some non-urea fertilizers, the government of India established an NBS (nutrient-based subsidy) scheme.

What is the need for increasing Fertilizer Subsidy on DAP?

• Buffering the farmers from price rise: The increase in Fertilizer Subsidy would save the agriculturalists from the price increase. The fertilizer businesses have improved the MRP of DAP (Diammonium phosphate) from 1200 to 1900 as global costs of ammonia, phosphoric acid, etc., raw materials have risen.
• Boost Production: DAP (Diammonium phosphate) is a vital fertilizer for producing soybean and cotton in India's northern and western parts. With an adequate Fertilizer Subsidy, the farmers would be able to produce more crops in the Kharif season.
• Handle the COVID impact: The agriculturalists are experiencing extreme pressure due to the challenges posed to them by the global pandemic. It comprises the loss of metropolitan remittances, the increasing cost of healthcare, and the demise of bread earners in the family. The increased Fertilizer Subsidy would deliver some comfort to them.

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In a nutshell, the farmer subsidies have come in as a boon to Indin farmers. Furthermore, the final solution is to make farming more remunerative and lucrative, leading to the subsidies withdrawal and reducing the government's monetary obligation.

FAQs on Fertilizer Subsidy

Q.1. Why is the government planning to offer a Fertilizer Subsidy?

The government plans to offer a Fertilizer Subsidy to farmers in the country to help them purchase costly fertilizers at a lower price than the prevailing market rate.

Q.2. What is the Fertilizer Subsidy administration?

Under the Fertilizer Subsidy administration, agriculturalists purchase fertilizers at Maximum Retail Prices (MRP). Nevertheless, this Maximum Retail Price is below the average supply-and-demand-based market prices or what it takes to import or produce them.

Q.3. What are the benefits of an increase in Fertilizer Subsidy?

The increase in Fertilizer Subsidy would save the agriculturalists from the price increase. The fertilizer businesses have improved the MRP of DAP (Diammonium phosphate) from 1200 to 1900 as global costs of ammonia, phosphoric acid, etc., raw materials have risen.

Q.4. What is the MRP of the Urea Fertilizer Subsidy?

The MRP (Maximum Retail Price) of the Urea Fertilizer Subsidy is presently set at Rs 5,378 per tonne, or a 45-kg bag available at Rs 242.

Q.5. When did Fertilizer Subsidy begin in India?

The Fertilizer Subsidy in India began during the Green Revolution period.