Facing flak for the hike in fertiliser prices, the government Wednesday announced an increase in subsidy for di-ammonium phosphate (DAP) fertilisers from Rs 500 per bag (50-kg) to Rs 1,200 per bag. “With today’s decision, farmers will continue to get a DAP bag for Rs 1200,” the Prime Minister’s Office said in a statement.
The decision was taken during a high-level meeting chaired by PM Narendra Modi. During the meeting, a “detailed” presentation was made to the Prime Minister on the issue of fertiliser prices.
“It was discussed that the price of fertilisers is undergoing an increase due to the rising prices of phosphoric acid, ammonia, etc. internationally. PM stressed that farmers should get fertilisers at old rates despite the international rise in prices,” the statement said.
“A historic decision was taken to increase the subsidy for DAP fertiliser from Rs. 500 per bag to Rs. 1200 per bag, which is an increase of 140%,” it said.
“Thus, despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs.1200 and the central government has decided to bear all the burden of price hike. The amount of subsidy per bag has never been increased so much at once,” it added.
The government’s move comes a month after the fertiliser companies announced a sharp hike in the DAP prices. On April 8, Indian Farmers Fertiliser Cooperative (IFFCO), had raised the maximum retail price of a 50-kg DAP bag by 58 per cent — from Rs 1,200 per bag to Rs 1,900 per bag — with the new price effective from April 1, 2021. The Centre had urged the fertiliser industry to maintain retail prices of DAP at “reasonable” levels.
“Recently, the international prices of phosphoric acid, ammonia etc. used in DAP have gone up by 60% to 70%. So the actual price of a DAP bag is now Rs 2400, which could be sold by Fertilizer companies at Rs 1900 after considering a subsidy of Rs 500. With today’s decision, farmers will continue to get a DAP bag for Rs 1200,” the PMO statement said.
“Last year, the actual price of DAP was Rs 1,700 per bag. In which the Central Government was giving a subsidy of Rs. 500 per bag. So the companies were selling fertilizer to farmers for Rs 1200 per bag,” the statement said.
The increase in subsidy for DAP fertilisers will mean an additional burden of Rs 14,775 crore on the government in the upcoming kharif season.
“The central government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year. With the increase in subsidy in DAP, Government of India will spend an additional Rs 14,775 crore as subsidy in Kharif season,” the statement said.