> The cabinet decision is aimed at ensuring that fertilizers are available to farmers at an affordable price
> Fertilizer and food are two major subsidy components in the Centre’s annual spending
The Narendra Modi government on Wednesday cleared a ₹22,186 crore subsidy for phosphorous and potassium fertilizers for the current fiscal, an annual exercise aimed at ensuring that fertilizers are available to farmers at an affordable price.
The subsidy component on retail price of fertilizers is announced at the beginning of the fiscal and subsequent changes in raw material cost, import price and currency fluctuations get reflected in the retail price.
The budget documents presented in Parliament on 1 February indicated that the revised subsidy estimate for FY20 for the two fertilizers alone was ₹26,335 crore. The actual amount spent in the full fiscal ended March will be known later. Briefing reporters, information and broadcasting minister Prakash Javadekar said: “There was a decision to increase the subsidy on phosphatic and potassium fertilizers for the year 2020-21. Now this year, the government will incur an expenditure in the form of subsidy of ₹22,186 crore…The subsidy, which is a regular scheme, this year will be more…the increase is nearly 5-7%," Javadekar said.
Fertilizer and food are two major subsidy components in the central government’s annual spending. The Modi administration intends to spend ₹1.19 trillion in FY21, which is about 10% less than the ₹1.3 trillion it is estimated to have spent in the fiscal year ended 31 March, according to the revised estimate in the budget documents. The final figure will be known later. According to U.S. Awasthi, managing director of fertilizer major Indian Farmers Fertiliser Cooperative Ltd (IFFCO), fertilizer makers do not find any problem with the current international price trends. India imports its entire requirement of potash fertilizers. IFFCO, he said, is fully geared up to meet the fertilizer demand this year too, after having made a record production of over 9.1 million tonnes last fiscal.
Awasthi said industry body Fertilizer Association of India has sought a relaxation in the distance trucks carrying fertilizers could move in a day to make up for the slow pace of loading rakes due to social distancing norms.
With a normal monsoon predicted, timely availability of fertilizer is expected to boost farm output. The decision on subsidy for phosphorous and potash fertilizers for the current year was taken by the Cabinet Committee on Economic Affairs on Wednesday. It comes amid a national lockdown meant to arrest the spread of the novel coronavirus disease which has brought the industrial and services sectors to a standstill. The stoppage of economic activity has seen millions of migrant workers from cities make their return to rural areas, increasing pressure on the rural economy.
Some sectors including agricultural activity have resumed slowly since Monday as the government looks to gradually lift restrictions to ensure covid-19 infections do not show a sudden spike.
“The subsidy would be released to fertilizer companies as per above rates so that they can make available fertilizers to farmers at a cheaper price than it would have been otherwise," a government statement said.
A normal monsoon predicted for this year offers some relief to policymakers given almost all parts of the economy, including manufacturing, construction and services, having taken a beating because of the pandemic. Robust farm output will help ease the stress in the overall economy, experts said. The four-month monsoon season starting June is crucial for the agrarian economy, as it provides more than 75% of the annual rainfall every year.