Fertiliser Subsidy

Subject – Agriculture

Context – Govt. nod for fertilizer subsidy

Concept –

The Centre has approved an additional fertilizer subsidy of ₹28,655 crore for the rabi or winter planting season, which runs from October 2021 to March 2022.
The Cabinet Committee on Economic Affairs approved the new nutrient-based subsidy rates for phosphatic and potassic fertilizers.
Unlike urea where the Centre sets a fixed maximum retail price, non-urea fertilizer prices are decontrolled, with the government fixing nutrient-based subsidy rates instead.
The subsidy is paid to fertilizer companies as compensation for selling their products to farmers below market prices.
Thus, the price a farmer pays for a 50-kg bag of di-ammonium phosphate (DAP), the most popular fertilizer after urea, would continue to remain at ₹1,200.
The increased subsidy would off-set the hike in global rates of DAP, nitrogen, phosphate and potassic fertilizers.

To know about Fertilisers, please click here.

To know about Fertilisers subsidy, please click here.

How is the subsidy paid and who gets it?

The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer who pays MRPs less than the market-determined rates.
Companies, until recently, were paid after their bagged material had been dispatched and received at a district’s railhead point or approved godown.
From March 2018, a new so-called direct benefit transfer (DBT) system was introduced, wherein subsidy payment to the companies would happen only after actual sales to farmers by retailers.
With the DBT system, each retailer — there is over 2.3 lakh of them across India — now has a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.