PM Modi hikes fertiliser subsidy by 140% to relieve farmers amid international price rise

In a significant development concerning the agriculture sector of the country, Prime Minister Narendra Modi decided to hike the subsidy of DAP fertilisers by 140%, making it the highest increase in subsidy for fertilisers in India. This decision came after PM Modi chaired a high-level meeting on Wednesday in which officials gave a detailed presentation on the issue of fertiliser prices hike. It was discussed that the price of fertilisers is undergoing an increase due to the international price rise of phosphoric acid, ammonia among other inputs. PM Modi while directing the officials said that farmers should get fertilisers at old rates despite the hike in international prices.

It was decided in the meeting that the subsidy for DAP fertiliser would be increased from Rs. 500 per bag to Rs. 1200 per bag, which is an increase of 140%, to retain the previous retail price of the DAP fertilisers, despite the international market prices of DAP. The Centre has decided to continue selling the DAP fertilisers at the older price of Rs.1200 while bearing the entire burden of price hike. The amount of subsidy per bag has never been increased so much at once, according to an official press release.

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.

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.

Additional expenditure of Rs 14,775 crore for government

The Prime Minister asserted that the Central Government is committed to the welfare of farmers taking all efforts to ensure that farmers do not have to face the brunt of price-rise.

The Central Government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year. With the increase in subsidy in DAP Fertilisers, the Government of India will spend an additional Rs 14,775 crore as subsidy in the Kharif season. This is the second major decision in the farmers’ interest, after directly transferring Rs. 20,667 crore in Farmers’ account under PM-KISAN on the day of Akshay Tritiya. Hailing the "historic" decision, BJP president JP Nadda said the Modi government has been committed to farmers' welfare and doubling their income since it came to power.

This development also assumes significance as NCP chief and former Agriculture Minister Sharad Pawar on Tuesday wrote to Union Chemical and Fertilisers Minister DV Sadananda Gowda, demanding a roll-back of increase in fertiliser prices. He stated that farmers are bearing the brunt of the lockdown due to the COVID-19 pandemic, coupled with the rise in fertiliser prices.