Russia Ukraine War Pushes Indian Govt. To Raise Fertiliser Subsidy Upto 55%

Russia invaded Ukraine on 24 February, 2022. Its impact is felt in India as the Union Cabinet approved an additional subsidy of Rs 40,000 crore for the upcoming kharif season (AprilSeptember), seeking to shield farmers from any additional burden due to a sharp rise in input costs globally . The substantial increase in subsidy will help compensate Fertiliser companies for selling their products to farmers at lower – than – market prices. It will cover phosphatic, potassium and diammonium phosphate group of crop nutrients.

Against the allocation of Rs 21,000 crore for the first half of the year, the government will now spend Rs 61,000 crore towards subsidy on phosphate-based fertilisers. The hike in Nutrient Based Subsidy (NBS) is likely to push the goernment’s Fertiliser subsidy bill to around 2 lakh crore, based on current price trends. Government officials said in several segments there is a possibility of a further increase in international prices due to the war in Ukraine.

India, the world’s largest buyer of urea & diammonium phosphate, has been hit by a sharp rise in global Fertiliser prices due to supply disruptions. Costlier raw materials, higher freight charges & tighter coal and natural gas supplies due to the Ukraine war are likely to keep fertiliser prices elevated this year.

The following chart shows how the impact of prices is absorbed:
Absorbing the Price Impact
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Fertiliser subsidy over the years – Figures in Crore Rs.
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Year P & K fertiliser Urea. Total Subsidy
2019-20 26 ,368. 57,109. 83,477
2020-21. 38,990. 99,537. 1,38, 527
2021-22. 57,202. 1,04,982. 1,62,184
2022-23. 60,940. 67,187. 1,28,127

In short earlier the Russian invasion ends, lesser the price impact across the globe, hence the
prayer for early end of Russian conflict with Ukraine!