Prime Minister Narendra Modi, during his address to the nation on the occasion of 77th Independence Day on 15th August 2023, announced a subsidy of Rs 10 lakh crore to make Urea available to farmers at an affordable price.
In his address, Prime Minister Modi said that urea, which costs Rs 3,000 per bag globally, is being given to farmers at a cheaper rate of Rs 300 per bag.
Fertilisers are chemicals used in agriculture to increase yield which are used to aid plant growth. These chemicals, which dissolve quickly in water, are applied to the soil or by spraying on the leaves.
Fertiliser is primarily a natural or synthetic substance containing the chemical elements nitrogen (N), phosphorus (P) and potassium (K), used to improve plant growth and productivity.
There are mainly three types of fertilisers used in the country, these are Urea, DAP and Muriate of Potash (MOP).
The government pays subsidies to the fertiliser manufacturers so that the farmers can get the fertiliser at a lower price than the market price.
The difference between the cost of production/import of the fertiliser and the actual amount paid by the farmers is borne by the government in the form of subsidy.
Subsidy on Urea:
In India, urea is the most produced, imported, consumed and physically regulated fertiliser. It is subsidised only for the use of farmers.
The government pays subsidies on urea to fertiliser manufacturers based on the cost of production at each plant and sells the fertiliser to units at the maximum retail price (MRP) fixed by the government.
Subsidy on non-urea fertilisers:
The MRP of non-urea fertilisers is not fixed by the companies. But the government has put fertilisers under government control, especially after the rise in global prices of fertilisers after the Russia-Ukraine war.
All non-urea based fertilisers are regulated under the Nutrient Based Subsidy Scheme.