{"id":107448,"date":"2026-06-10T12:38:58","date_gmt":"2026-06-10T07:08:58","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=107448"},"modified":"2026-06-10T12:38:58","modified_gmt":"2026-06-10T07:08:58","slug":"fertiliser-subsidy-burden","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/fertiliser-subsidy-burden\/","title":{"rendered":"Fertiliser Subsidy Burden Set to Double Amid Global Supply Crunch"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><strong>Fertiliser Subsidy Latest News<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India&#8217;s fertiliser subsidy burden is likely to double to nearly Rs. 3.4 lakh crore in 2026-27 due to surging global prices caused by the West Asia conflict and the closure of the Strait of Hormuz.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>About Fertilisers and India&#8217;s Dependence<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fertilisers are essential agricultural inputs that supply nutrients, primarily nitrogen (N), phosphorus (P), and potassium (K), to crops, supporting higher yields and food security. India&#8217;s agriculture is heavily dependent on fertilisers, particularly:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Urea<\/b><span style=\"font-weight: 400;\">: The most widely used nitrogen-based fertiliser, primarily used for crops like rice, wheat, and sugarcane.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Di-Ammonium Phosphate<\/b><span style=\"font-weight: 400;\"> (DAP): A phosphate-based fertiliser.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Muriate of Potash<\/b><span style=\"font-weight: 400;\"> (MOP): A potassium-based fertiliser.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Nitrogen-Phosphorus-Potassium<\/b><span style=\"font-weight: 400;\"> (NPK) Complex Fertilisers: Multi-nutrient fertilisers.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India is one of the largest importers of fertilisers in the world. Major exporters include China, Russia, Morocco and Gulf nations (Oman, Qatar, Saudi Arabia, UAE, Bahrain)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Before the West Asia war, the Gulf nations accounted for around 40% of India&#8217;s urea imports.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Fertiliser Subsidy Regime in India<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li><span style=\"font-weight: 400;\">The Indian government heavily subsidises fertilisers to make them affordable for farmers and maintain food security. The subsidy system operates under two main frameworks:<\/span><\/li>\n<li aria-level=\"1\"><b>Urea Subsidy<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Urea is sold at a fixed Maximum Retail Price (MRP) of around Rs. 268 per 45-kg bag.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The difference between the production\/import cost and the MRP is borne by the government as a subsidy.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Nutrient-Based Subsidy (NBS) Scheme<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Launched in April 2010 for non-urea fertilisers (DAP, MOP, complex fertilisers).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The government provides a fixed subsidy per kg of nutrient content (N, P, K, and Sulphur).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Manufacturers can fix the MRP based on market conditions.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Direct Benefit Transfer (DBT)<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Since 2018, fertiliser subsidy has been routed through the DBT mechanism.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Sales are recorded through PoS (Point of Sale) machines at retail outlets.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Subsidy is released to companies based on actual sales to farmers.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>News Summary<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">According to top government sources, India&#8217;s fertiliser subsidy burden is likely to reach Rs. 3.4 lakh crore in 2026-27, an almost 100% increase compared to the Budget estimate of Rs. 1.7 lakh crore.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The cost of a fertiliser sack has surged from around Rs. 2,900 post-COVID to around Rs. 4,500 now, while the government continues to sell it at a subsidised price of around Rs. 300 per sack.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Causes of the Surge<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li aria-level=\"1\"><b>Global Supply Crunch<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The West Asia conflict and the closure of the Strait of Hormuz, a critical waterway, have caused massive disruptions:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India&#8217;s latest urea purchases were at a cost-plus-freight price of $935-$959 per tonne.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">This is more than double the year-ago figure of $410-$420 per tonne.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Global suppliers, including China, are holding on to their stock due to the Iran war.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>China&#8217;s Export Ban<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">In mid-March 2026, China banned the export of fertilisers to secure domestic supplies, removing a critical source of supply for India.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Shift to Russia and Alternative Sources<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Given the supply crunch, the government is exploring alternative sources:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">India&#8217;s urea imports from Russia rose to 13.99 LMT from 9.23 LMT.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Imports from China surged to 21.24 LMT in the first 11 months of 2025-26 from just 0.99 LMT in all of 2024-25 (before the ban).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The government is now planning to tap Russia to meet more of its import requirements.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Fiscal Implications<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li aria-level=\"1\"><b>Subsidy Spending Trends<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">2024-25: Rs. 1.73 lakh crore on fertiliser subsidy.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">2025-26 (Revised Estimate): Raised to Rs. 1.86 lakh crore from initial Rs. 1.68 lakh crore.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">2025-26 (Actual): Rs. 2.11 lakh crore, Rs. 24,920 crore more than the revised estimate, 22% higher than 2024-25.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">2026-27 (Budget Estimate): Rs. 1.71 lakh crore, likely to balloon to Rs. 3.4 lakh crore.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>April 2026 Expenditure<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The Controller General of Accounts data shows the Centre spent Rs. 22,033 crore as subsidy in April 2026 for urea and nutrient-based fertilisers, roughly 13% of the full-year estimate in just one month.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Pressure on Fiscal Deficit<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The fiscal pressure from the fertiliser subsidy is compounded by:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Rs. 1.23 lakh crore lost in revenue foregone due to the Rs. 10 per litre excise duty cut on fuel.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Under-recoveries of public sector oil marketing companies (OMCs), earlier Rs. 1,000 crore a day, now around Rs. 650 crore.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">April 2026 fiscal deficit surged to a 26-month high of Rs. 3.62 lakh crore, accounting for 21.4% of the entire 2026-27 target.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>The &#8220;3 Fs&#8221; Challenge<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Finance Minister Nirmala Sitharaman highlighted the &#8220;3 Fs&#8221; that require focus amid rupee pressure:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Fertiliser: heavily imported, surging prices.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Fuel: crude oil dependence, elevated global prices.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Foreign exchange to buy gold: a significant import bill.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">All three items must be paid for in foreign currency, putting pressure on the rupee.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Concerns Over Diversion<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li aria-level=\"1\"><b>Current Stock Position<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Despite the price pressures, the government has stated that the overall stock position is &#8220;comfortable&#8221; for the kharif season:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Kharif fertiliser requirement (2026): 383.9 LMT<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Current stocks: 197.56 LMT (51% of requirement)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Usual stock level: About 33%, so current stocks are significantly higher<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Farmer purchases so far: 86.65 LMT (just under 23% of total requirement)<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Government Response<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The government has instructed states to:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Provide fertiliser based on the actual requirement plus a reasonable buffer.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Strengthen monitoring at retail outlets.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Use PoS data to track unusual purchase patterns.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Significance and Implications<\/strong><\/h2>\n<ul>\n<li style=\"text-align: justify;\" aria-level=\"1\"><b>For Farmers<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Continued subsidised access to fertilisers despite the global price surge.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Risk of supply disruptions if imports are not secured.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Need for soil health awareness and balanced fertiliser use.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\" aria-level=\"1\"><b>For Government Finances<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Massive fiscal burden affecting other priorities.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Pressure on fiscal deficit targets.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Trade-offs with other welfare and capital expenditure.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"text-align: justify;\" aria-level=\"1\"><b>For India&#8217;s External Sector<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">A higher import bill puts pressure on the current account deficit.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Foreign exchange outflows are affecting the rupee.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Need to diversify import sources.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>For Agricultural Policy<\/b>\n<ul>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Long-term concerns about fertiliser subsidy sustainability.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Need for promoting organic and natural farming.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Importance of soil health management.<\/span><\/li>\n<li style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Push for nano fertilisers and precision agriculture.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/business\/fertiliser-subsidy-burden-set-to-double-on-global-supply-crunch-10732142\/#:~:text=RISING%20GLOBAL%20costs%20of%20fertilisers,according%20to%20top%20government%20sources.\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.thehindu.com\/business\/fertiliser-subsidy-bill-for-fy27-may-rise-by-70000-crore-on-west-asia-crisis-official\/article70995316.ece\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fertiliser subsidy burden in India is set to nearly double to Rs. 3.4 lakh crore amid the West Asia crisis, supply disruptions, and surging global prices.<\/p>\n","protected":false},"author":21,"featured_media":107441,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[8045,60,22,59],"class_list":{"0":"post-107448","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-fertiliser-subsidy","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs-tag","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/107448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=107448"}],"version-history":[{"count":3,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/107448\/revisions"}],"predecessor-version":[{"id":107498,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/107448\/revisions\/107498"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/107441"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=107448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=107448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=107448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}