Copyright infringement not intended

Picture Courtesy: BUSINESS STANDARD

Context:

The Union Cabinet has approved the extension of the One-time Special Package on Di-Ammonium Phosphate (DAP).

About Fertilizer subsidy in India

It is financial support provided by the government to make fertilizers affordable for farmers, especially small and marginal ones.

Fertilizers are essential for enhancing agricultural productivity, but they are costly, so the subsidy helps to reduce the financial burden on farmers.

The Union Budget for 2024 allocated Rs 164,000 crore for fertilizer subsidy.

Two main components of the fertilizer subsidy

• Urea Subsidy: Urea is a nitrogenous fertilizer, and it accounts for around 80% of the total fertilizer consumption in India. It is sold at a uniform, government-fixed price.
• Nutrient-Based Subsidy (NBS) was introduced in 2010, this scheme applies to phosphatic and potassic (P&K) fertilizers. It sets a subsidy rate for each nutrient based on its content and market prices.

What is the recent Cabinet approval regarding Di-Ammonium Phosphate (DAP)?

The Union Cabinet led by the Prime Minister has approved the extension of the One-time Special Package on Di-Ammonium Phosphate (DAP) beyond the NBS subsidy. This extension will be effective from January 1, 2025, until further orders.

The objective is to ensure the sustainable availability of DAP at affordable prices for farmers. The special package will be provided at Rs 3,500 per metric ton (MT).

The estimated budgetary requirement for this extension of the special package is approximately Rs. 3,850 crore. This amount will help to maintain affordable prices for DAP during the specified period.

How does the subsidy on fertilizers work, and how is DAP affected?

Since April 1, 2010, the subsidy on Phosphatic and Potassic (P&K) fertilizers, including DAP, has been managed through the National Budgetary Support (NBS) scheme.

The government ensures that farmers have access to fertilizers at subsidized prices. Despite global market volatility and geopolitical factors, the government has made sure that DAP remains available at affordable rates for the Kharif and Rabi seasons of 2024-25.

What are the main benefits of this extension for farmers?

DAP will continue to be available to farmers at subsidized, affordable, and reasonable prices. This helps farmers maintain productivity without the burden of high fertilizer costs.

 Must Read Articles: 

NON UREA FERTILIZERS

NUTRIENT BASED SUBSIDY (NBS) SCHEME

FERTILIZERS SUBSIDY

Source: 

PIB