Government implements nutrient based subsidy policy for decontrolled P&K fertilizers

Government has been implementing Nutrient Based Subsidy (NBS) Policy for decontrolled P&K fertilizers. The Cabinet Committee on Economic Affairs (CCEA) Union Cabinet chaired by Prime Minister Shri Narendra Modi on March 31 approved the Fixation of Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilizers for the year 2017-18.

Under this policy, the subsidy on Phosphatic and Potassic (P&K) fertilizers is announced by the Government on annual basis for each nutrient i.e., Nitrogen (N), Phosphorous (P), Potash (K) and Sulphur (S) on per kg basis which is converted into subsidy per tonne depending upon the nutrient content in each grade of the fertilizers. These rates are determined taking into account the international and domestic prices of P&K fertilizers, exchange rate, inventory level in the country etc.

The CCEA in its meeting held on 31st March, 2017 decided to fix the NBS rates for 2017-18. As compared to 2016-17, the subsidy for the period 2017-18 has decreased from Rs. 13.241/kg to 11.997/kg (decrease of Rs. 1.244/kg) for P, from Rs. 15.470/kg to 12.395/kg (decrease of Rs. 3,075/kg) for K whereas the subsidy of N has increased from Rs. 15.854/kg to 18.989/kg (an increase of Rs. 3.135/kg) and of S from Rs. 2.044/kg to 2.240/kg (an increase of Rs. 0.196/kg).

During 2016-17, the estimated consumption of P&K fertilizers is 279.8 LMT. Based on the assumption that the consumption of P&K fertilizers during 2017-18 would remain the same, the estimated subsidy requirement at proposed rates would be Rs. 19,848.99 Crores which is lower than 2016-17 (Rs. 20,688.43 Crores) by Rs. 839.44 crores.

This is in continuation with the reforms being undertaken in the fertilizers sector over the past two and a half years including DBT for subsidy payment, neem coating of Urea, reduction in MRP of P&K fertilizers to promote balanced use of nutrients, removal of minimum production criteria for manufacturers of Single Super Phosphate (SSP).