The Centre on May 19, 2021 decided to hike the DAP (di-ammonium phosphate) subsidy by 140 per cent to provide the fertiliser to farmers at old rate despite international price rise.
- The subsidy has been increased from 500 rupees per bag to 1200 rupees per bag.
- Recently, the international prices of phosphoric acid, ammonia and others used in DAP have gone up by 60 to 70 percent. So, the actual price of a DAP bag is currently 2400 rupees which could be sold by Fertilizer companies at 1900 rupees after considering earlier announced subsidy of 500 rupees. With today’s decision, the farmers will continue to get a DAP bag for 1200 rupees.
About Fertilizer subsidy
- The Central Government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year. With the increase in subsidy in DAP, Government of India will spend an additional Rs 14,775 crore as subsidy in Kharif season.
- Farmers buy fertilisers at MRPs (maximum retail price) below their normal supply-and-demand-based market rates or what it costs to produce/import them.
- The MRP of neem-coated urea, for instance, is fixed by the government.
- The MRPs of non-urea fertilisers including DAP are decontrolled or fixed by the companies. The Centre, however, pays a flat per-tonne subsidy on these nutrients to ensure they are priced at “reasonable levels.”
