The Cabinet has approved continuation of the urea subsidy till 2020 at an estimated cost of Rs 1,64,935 crore. The government also approved implementation of direct benefit transfer (DBT) for disbursement of fertiliser subsidy. Retail price of urea has not been changed from Rs 5,360/tonne or Rs 268/50-kg bag (excluding central/state tax and charges towards neem coating) since 2012. Prices vary from state to state and on an average farmers get urea at about Rs 300/bag. The Centre subsidises the difference between the cost of delivered fertilisers at retail store (both cost of production and freight) and the MRP paid by farmers. The subsidy is paid to fertiliser manufacturer/ importer by the government.
The continuation of the urea subsidy scheme will ensure that adequate quantity of the fertiliser is made available to farmers at statutory controlled price, the government said in a statement. The implementation of DBT in the fertiliser sector will reduce diversion and plug leakages, it said.