Parliamentary panel seeks allocation of realistic fertiliser subsidy fund at budget estimate stage

NEW DELHI: A parliamentary panel has recommended to the finance ministry to allocate funds for fertiliser subsidy at the budget estimate (BE) stage to ensure that allocations are as close as possible to actual requirements.

The standing committee on fertiliser, in its report submitted in Parliament on Friday, said the practice of parking subsidies in subsequent year’s liabilities also distorts the true picture of govt’s subsidy outgo. Taking note of higher subsidy outgo for imported urea and other soil nutrients, the panel has recommended ramping up domestic production.

“The committee observed that the per-bag subsidy burden on imported urea, at approximately Rs 2,100 per 45-kg bag, is substantially higher than the subsidy of approximately Rs 1,397 per bag for domestically produced urea. The significant difference arises from the volatility of international urea prices, freight and insurance costs, port handling charges, and exchange rate fluctuations,” the report said.



Similarly, in the case of phosphatic and potassic fertilisers (NPK), the subsidy outgo for imported varieties is higher than for domestically produced soil nutrients.

On Friday, the fertiliser department informed Lok Sabha that the import of urea from Russia increased from 9.2 lakh tonnes in 2024-25 to 14 lakh tonnes till Feb while the import of China spiked from 1 lakh tonnes to 21.2 lakh tonnes. The NPK import from China also increased from less than 1 lakh tonnes in 2024-25 to 9.6 lakh tonnes in the current financial year.

Seeking realistic, upfront budgetary allocation for subsidy, the panel noted that in FY24, against the BE (budget estimate) of Rs 1.8 lakh crore, the final allocation was revised upward to nearly Rs 2 lakh crore, and in FY26, the BE of Rs 1.8 lakh crore for fertiliser subsidy was revised to Rs 2.2 lakh crore.
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