Cabinet Approves ₹24,475 Crore Subsidy for P&K Fertilizers for Rabi Season 2024-25

The Indian government has always been proactive in ensuring that the backbone of the nation—its farmers—receives the necessary resources to thrive. In a recent decision that underscores this commitment, the Union Cabinet, led by Prime Minister Narendra Modi, approved a ₹24,475 crore subsidy for phosphatic and potassic (P&K) fertilizers for the rabi season 2024-25. This move is part of the Nutrient Based Subsidy (NBS) scheme that has been in place since April 1, 2010, and aims to keep fertilizers affordable for farmers.

Nutrient Based Subsidy (NBS) Scheme Overview

The NBS scheme governs the pricing of P&K fertilizers in India. Under this system, the government fixes a subsidy rate for nitrogen (N), phosphorus (P), potash (K), and sulphur (S), which helps to cushion the impact of global price fluctuations. The primary objective is to ensure that fertilizers are available to farmers at reasonable prices, encouraging optimal use of nutrients to boost crop production. The rabi season, which extends from October to March, is critical for India’s agricultural output, as it includes the cultivation of important crops like wheat, barley, and pulses.

This recent approval by the Union Cabinet will cover the rabi season 2024-25, with a tentative budgetary outlay of ₹24,475.53 crore. The announcement comes at a time when international fertilizer prices have been volatile, driven by fluctuations in the cost of inputs such as urea, DAP (Di-Ammonium Phosphate), MOP (Muriate of Potash), and sulphur.

Why This Subsidy Matters?

Fertilizers play a crucial role in enhancing crop productivity by supplying essential nutrients to the soil. However, the prices of fertilizers, especially P&K fertilizers, are largely influenced by international markets. This poses a challenge for Indian farmers, who rely on fertilizers to improve crop yields but may struggle to afford them when prices rise.

To mitigate this, the government provides subsidies to fertilizer manufacturers and importers, who in turn sell the fertilizers at a subsidized rate to farmers. By approving the NBS rates for the rabi season of 2024, the government aims to ensure that there is no disruption in the supply of fertilizers and that farmers have access to them at prices they can afford.

The decision also addresses the issue of global price volatility. By fixing the subsidy rates, the government can offset some of the cost increases that fertilizer companies would otherwise pass on to farmers. This helps stabilize prices in the domestic market and ensures that farmers can continue to purchase fertilizers at subsidized rates, even when international prices are on the rise.

Fertilizer Availability and Grades

The government, through this subsidy, will make 28 different grades of P&K fertilizers available to farmers. These grades include some of the most commonly used fertilizers in Indian agriculture, such as:

• Urea: A major source of nitrogen, urea is one of the most widely used fertilizers in India.
• DAP (Di-Ammonium Phosphate): A popular choice for providing phosphorus and nitrogen to crops, DAP is essential for root development.
• MOP (Muriate of Potash): This provides potassium, which strengthens plant resistance to diseases and improves water retention.
• Sulphur: Used to improve the overall health and yield of crops, especially oilseeds and pulses.

The NBS rates ensure that these fertilizers remain accessible to farmers, allowing them to maximize crop productivity during the rabi season.

Addressing Global Price Trends

The decision to approve the subsidy also comes in the context of recent global price fluctuations for fertilizers and their inputs. According to the official statement, the government has taken into account the international prices of urea, DAP, MOP, and sulphur when deciding the NBS rates for the upcoming rabi season. This forward-looking approach is aimed at preventing price shocks in the Indian market, which could otherwise affect farmers' ability to afford fertilizers.

By maintaining subsidies on these essential inputs, the government ensures that domestic fertilizer prices remain insulated from international price volatility. This is particularly important given that India imports a significant portion of its fertilizer requirements, making the sector vulnerable to global price movements.

Impact on Farmers and Agricultural Productivity

The impact of this subsidy will be felt across India's agricultural landscape, particularly during the rabi season. Fertilizers are an indispensable part of modern farming, and their timely availability at affordable rates is critical for ensuring high yields. With this subsidy in place, farmers will have access to the nutrients they need to maintain soil fertility and grow healthy crops.

Moreover, the rabi season is a crucial period for food production in India, with crops like wheat, barley, chickpeas, and mustard being widely cultivated. Ensuring that farmers have access to affordable fertilizers during this time can significantly boost productivity, supporting the country’s food security goals.

Government’s Commitment to Agriculture

This latest approval of a ₹24,475 crore subsidy reaffirms the government’s commitment to supporting the agricultural sector. By making fertilizers more affordable, the government is ensuring that farmers can continue to cultivate high-quality crops without facing the burden of high input costs. This, in turn, contributes to the broader goal of achieving sustainable agricultural development.

Additionally, the NBS scheme reflects the government's long-term strategy to encourage balanced use of fertilizers. By subsidizing a range of nutrients—including nitrogen, phosphorus, and potassium—the scheme promotes more efficient and effective nutrient management, reducing the overuse of certain fertilizers and promoting healthier soils.

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The Union Cabinet’s approval of the ₹24,475 crore subsidy for P&K fertilizers for the rabi season 2024-25 is a crucial step in ensuring that Indian farmers have the resources they need to succeed. By maintaining affordable prices for essential fertilizers, the government is helping to secure the nation’s agricultural productivity and food security. As global fertilizer prices remain volatile, this subsidy will play a pivotal role in protecting farmers from price shocks and enabling them to focus on what they do best—growing the crops that feed the nation.

With the government’s continued support, the agricultural sector can look forward to a productive and successful rabi season, contributing to the long-term growth and sustainability of India’s food systems.

Source: Business Standard