Fertiliser Subsidy Projections May Exceed Rs 3 Lakh Crore in FY27, Official Says

India's Fertiliser Subsidy Bill Could Cross Rs 3 Lakh Crore Amid West Asia Crisis

India's fertiliser subsidy bill is poised to rise significantly in the current fiscal due to disruptions in the global market resulting from the West Asia crisis. A senior government official has warned that the subsidy bill could cross Rs 3 lakh crore if the disruptions prolong.

The budgetary allocation for fertiliser subsidies in 2026-27 stands at Rs 1.71 lakh crore. However, the sharp increase in prices of urea, Di-Ammonium Phosphate (DAP), and other soil-nutrients in the global market is expected to lead to a substantial rise in the subsidy bill. Krishna Kant Pathak, joint secretary in the Department of Fertilizers, informed that the government currently has sufficient stocks of fertilisers, with almost 20 million tonnes in storage.

The government is sourcing fertilisers from different countries through long-term agreements, but this has a cost. The cost of subsidies has increased substantially, and it is expected to be a burden for the government. Pathak stated that the fertiliser subsidy bill could be more than Rs 3 lakh crore if the problem persists.

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India consumes around 70 million tonnes of fertilisers annually. Pathak also expressed concern over the diversion of urea for industrial usage. Despite these challenges, the government has assured that there is adequate availability of fertilisers in the country to meet the demand for soil nutrients during the upcoming Kharif (summer-sown) season.

Table: Comparison of Fertiliser Stock and Demand

As of date, the fertiliser stock in the country is 200.12 lakh tonne, which is more than 50% of the projected Kharif demand. According to Aparna S Sharma, Additional Secretary, Department of Fertilizers, the overall stock position of fertiliser in the country remains comfortable.

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The Department of Agriculture has assessed the fertiliser requirement for Kharif 2026 at 390.54 lakh tonne. The Kharif sowing operation will begin in June. Sharma highlighted that the domestic production and import of fertilisers after the crisis have been substantial. The total domestic production has been about 95 lakh tonne, and about 22.60 lakh tonne of imports have reached Indian shores.

Table: Fertiliser Production and Import

India imports a large quantity of urea and diammonium phosphate (DAP) to meet local demand. The country's urea production has increased from 225 lakh tonne during 2014-15 to 306.67 lakh tonne in 2024-25.