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Resource centre on India's rural distress
 
 

India’s fertiliser subsidy set to rise by 62% in current financial year: Crisil

-The Hindu Business Line

This is on the back of swift rise in prices of raw materials and global natural gas

India is likely to witness an unprecedented jump in the Central government’s fertiliser subsidy on the back of swift rise in prices of raw materials and global natural gas. According to ratings agency Crisil, the government’s fertiliser subsidy bill is likely to be higher by 50,000 crore to touch the total outgo of 130,000 crore this financial year compared to last year’s 79,530 crore. This would be despite the sales volume of fertilisers declining by 10 per cent on-year, Crisil said. 

According to Crisil, to encourage farmers to use fertilisers for better crop yield, the government keeps their retail sales price (RSP) significantly lower than the market rate, and reimburses the difference to manufacturers through subsidy payments.

However, for long, government provisioning for such subsidy payments has been inadequate, which led to regular build-up of arrears that posed a challenge to the sector. But last fiscal, the government cleared the arrears through an additional disbursement of 62,638 crore.

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