‘The central government has decided to bear all the burden of price hike,’ the PMO said in a statement
In a major pro-farmer decision, the Centre on Wednesday hiked the subsidy on DAP fertiliser by 140 per cent, costing the exchequer an additional Rs 14,775 crore, in a bid to ensure the soil nutrient is available to farmers at old rates despite a sharp rise in global prices. The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi, according to a PMO statement.
“Government is committed to improving the lives of farmers. Therefore, despite increase in global prices, we have decided to make available the fertiliser at old rate,” Modi tweeted in Hindi. After urea, Di-ammonium Phosphate (DAP) is the most widely used used fertiliser in the country. “A historic decision was taken to increase the subsidy for DAP fertiliser from Rs 500 per bag to Rs 1200 per bag, which is an increase of 140 per cent. ….With today’s decision, farmers will continue to get a DAP bag for Rs 1200,” the Prime Minister’s Office (PMO) said.
Despite the rise in international market prices of DAP, it has been decided to continue selling it at the old price of Rs 1,200 per bag, it said. “The central government has decided to bear all the burden of price hike. The amount of subsidy per bag has never been increased so much at once,” it added. The government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year.
With the increase in subsidy for DAP, the government will spend an additional Rs 14,775 crore as subsidy in the Kharif season of this year, it said. In the meeting, the Prime Minister “stressed that farmers should get fertilisers at old rates despite the international rise in prices”, the statement said. The PM also said his government is committed to the welfare of farmers and will take all efforts to ensure that they do not have to face the brunt of price rise, the PMO added.
According to the statement, the high-level meeting discussed in detail the increase in domestic fertiliser rates due to the rising global prices of raw materials such as phosphoric acid and ammonia used in the making of DAP fertiliser. Recently, global prices of phosphoric acid and ammonia have gone up by 60-70 per cent.
So the actual price of DAP is now Rs 2,400 per bag, which was to be sold by fertiliser companies at Rs 1,900 after considering a subsidy of Rs 500, it said. Last year, the actual price of DAP was Rs 1,700 per bag, on which the central government was giving a subsidy of Rs 500. The companies were, therefore, selling the fertiliser to farmers for Rs 1,200 per bag, it added.
This is the second major decision in the farmers’ interest, after directly transferring Rs 20,667 crore to farmers’ accounts under the PM-KISAN scheme on the day of Akshay Tritiya, the statement added. Retail prices of non-urea fertilisers such as DAP, Muriate of Potash (MoP) and NPK are decontrolled and determined by manufacturers, while the Centre gives them fixed subsidies each year.
Recently, the government had requested fertiliser companies to sell old stock of non-urea fertilisers at old rates in the interest of farmers. However, some companies had hiked the rates of DAP, taking cues from the global market.