Due to rising global fertilizer prices, the fertilizer subsidy budget could reach a record level of Rs 1.65 lakh crore in the current financial year.
Due to the sharp rise in global raw material and fertilizer prices, the central government’s fertilizer subsidy expenditure could reach an all-time high of Rs 1.65 lakh crore in the current financial year. This could be a matter of concern for the central government as it has projected only Rs 1.05 lakh crore in fertilizer subsidy in the budget. This was stated in a report by credit rating agency Crisil on Thursday.
The report says the government has faced similar situations in the past and has been successful in dealing with them. Crisil said that in FY 2022, the government had allocated Rs 79,530 crore in the budget for fertilizer subsidy, but later to increase the need, a total of Rs 1.4 lakh crore was spent on this item.
Crisil said the government may have to intervene similarly this fiscal year to increase the fertilizer subsidy budget. Failing to do so, the subsidy arrears will cross Rs 75,000 crore by the end of this financial year.
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Earlier on Tuesday, there was a report that the central government had decided to increase subsidies on fertilizers for kharif crops so that farmers would not be affected by rising prices. The Department of Fertilizers said on Tuesday that since January 2021, prices of fertilizer and its raw materials have been rising steadily around the world.
Nitish Jain, director, Crisil Ratings, said: One of the main reasons behind this is the increase in the price of pumped gas. In the last financial year, due to the war between Russia and Ukraine, the price of gas has increased by 85 percent this fiscal year as well.
He added, “The retail price of urea has remained stable during this period, which has increased the burden of subsidy on the government. However, the government has approved the launch of some indigenous plants, which is expected to bring some relief. India imported 28 per cent of its urea requirement in FY21 and its dependence on imports will be halved with the commissioning of these plants.
