The government’s expenditure on providing fertilizers at cheaper rates to farmers dropped 6 per cent in the last fiscal to ₹1,77,129.5 crore, from ₹1,88,291.62 crore during 2023-24. The fall is mainly due to a reported decline in the import of urea and di-ammonium phosphate (DAP) coupled with lower international prices. Despite the drop, the actual subsidy was 3.4 per cent higher than the ₹1,71,310 crore provided in the Budget (Revised Estimate). The government has estimated the fertilizer subsidy to be about ₹1.68 lakh crore for FY25-26, with ₹1.19 lakh crore allocated for urea and ₹49,000 crore for phosphatic and potash. According to latest official data on actual subsidies incurred on the basis of registered sales, the subsidy for urea has risen 1 per cent in FY25 to over ₹1.24 lakh crore from ₹1.23 lakh crore in FY24. Meanwhile, the subsidy on phosphatic and potash fertilisers dipped 19 per cent to ₹52,810 crore from ₹65,199.58 crore. ‘Conscious decision’ “It is a conscious decision to bring down the subsidy as fertilizer is the next area after petroleum where there is scope to bring down fiscal expenditure gradually,” a former agriculture secretary said, adding that in the current scenario, the food subsidy cannot be touched, even though the government has to re-think about its rise after a few years. He pointed out that when potash subsidy was cut drastically from ₹20/kg to about ₹2/kg, after a few seasons farmers adjusted to the new retail price of ₹1,500–₹1,700/per bag (of 50 kg), whereas earlier both DAP and MOP were commanding almost same rates. The fertilizer ministry has been considering to launch a pilot in select districts on direct cash transfer of subsidy, for which it has developed a module, sources said. However, the details of the plans are yet to be discussed with the industry, while officials are tight-lipped. The Agriculture Ministry has already shared the data of different schemes such as PM-Kisan, PM Fasal Bima Yojana, Soil Health Card and also the latest unique id to each farmer mentioning their details like land holdings, crops sown and yield with the Fertilizer Ministry. DBT for fertilizers Currently, the direct benefit transfer (DBT) of fertilizer subsidy in implemented across the country, after it was launched in 2018, in which 100 per cent payment of subsidy is made to the fertilizer manufacturing companies on the basis of actual sales through POS machines by the retailer to the farmer. Selling price of urea, a fully controlled fertilizer, has been continuing at ₹267/per (45 kg) bag since past many years, and industry estimates show that it could be around ₹1,750/bag without subsidy. Similarly, DAP’s retail price has been fixed at ₹1,350/bag, which would shoot up to about ₹3,500/bag without subsidy. Published on April 21, 2025