GoI increases Fertilizer Subsidy by 140%

On May 19, 2021, the Government of India increased fertilizer subsidies to Rs 1,200 per bag. Earlier, it was Rs 500 per bag. Thus, the subsidies have been increased by 140%.

Why the subsidy?

The prices of fertilizers in the country are increasing at a faster rate. This is because prices of ammonia, phosphoric acid, etc are increasing internationally. They have increased by 60% to 70% internationally.

How will this benefit the farmers?

The actual price of fertilizer bag is now Rs 2,400. With the earlier subsidies, the farmer would have got the fertilizer bag at Rs 1,900. With the increased subsidy, the farmer will now get the bag at Rs 1,200. This is the rate at which he was getting the fertilizer bag earlier.

Budget to the increased Fertilizer subsidy

The GoI was spending Rs 80,000 crores for chemical subsidies earlier. Now, with the increase in subsidy, the Government of India will spend an additional Rs 14,775 crores.

This is the second major step in the interest of the farmers after the GoI recently transferred Rs 20,667 crores to the farmers account under PM-KISAN.

Background

The Government of India was following “No Denial” policy. Under this policy, anyone shall purchase the subsidised fertilizers through Point-of-Sale machines. In August 2020, the GoI restricted the limit to hundred bags. Later in January 2020, the restriction was further increased to fifty gags per month per person. This was done as the GoI was left with no headroom to revise the prices.

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