Govt extends additional subsidy package of up to Rs 3,850 cr for DAP fertiliser

The government on Wednesday extended additional subsidy on di-ammonium phosphate (DAP) beyond December 31, 2024, to help maintain retail prices of this key fertiliser at Rs 1,350 per bag of 50 kg -- a move that could cost the exchequer up to Rs 3,850 crore.

Last year, the Centre announced a one-time special package on DAP at Rs 3,500 per tonne, valid from April 1, 2024, to December 31, 2024, with a financial implication of Rs 2,625 crore to keep prices under check. The package was over and above the nutrient-based subsidy (NBS) fixed by the government on non-urea nutrients.

On Wednesday, the Union Cabinet -- chaired by Prime Minister Narendra Modi -- approved the proposal for an extension of a one-time special package on DAP at the rate of Rs 3,500 per tonne for the period from January 1, 2025, till further orders.

The decision has been taken to "ensure sustainable availability of DAP at affordable prices to the farmers", an official statement said.

The special package on DAP will be provided over and above the approved NBS (nutrient-based subsidy) to ensure the smooth availability of DAP fertiliser to the farmers at an affordable price.

Briefing media, Information and Broadcasting (I&B) Minister Ashwini Vaishnaw said farmers would continue to get DAP at Rs 1,350 per bag and the extra burden would be borne by the central government.

"One-time special package up to Rs 3,850 crore is approved for DAP fertiliser," he added.

He pointed out that the global market prices of DAP are volatile on geopolitical concerns.

The Centre provides 28 grades of P&K (phosphatic and potassic) fertilisers to farmers at subsidised prices through fertiliser manufacturers/importers.

The subsidy on P&K fertilisers is governed by the NBS Scheme, with effect from April 1, 2010.