India's Fertiliser Subsidy Could Exceed ₹3 Trillion Amid Ongoing West Asia Crisis

Fertiliser Subsidy Projections

The Union government's fertiliser subsidy might surpass ₹3 trillion this fiscal year if the crisis in West Asia persists. Krishna Kant Pathak, the joint secretary of the Department of Fertilisers, stated, “India has ample fertiliser stocks, exceeding 20 million tonnes.” His comments were made during a roundtable event titled “De-risking India’s Fertiliser Supply Chain and Demand Management Amid Rising Geopolitical Risks,” hosted by the Indian Council for Research on International Economic Relations (Icrier).

In the previous fiscal year (FY23), the fertiliser subsidy amounted to ₹2.51 trillion. If current projections hold, this year's subsidy could be approximately ₹1.29 trillion higher than the FY27 Budget estimate of ₹1.79 trillion.

Pathak noted that India consumes around 70 million tonnes of fertilisers annually, primarily nitrogen-based. The consumption includes about 10 million tonnes of diammonium phosphate, 15 million tonnes of NPKS (nitrogen, phosphorus, potassium, and sulphur), and roughly 40 million tonnes of urea. However, he pointed out that urea faces challenges, with only about 30% of it being absorbed by the soil.

He suggested that India could enhance its pulse production and promote local crops like ragi and sesame seeds. Additionally, he recommended the use of ammonium sulphate, which boasts a significantly higher absorption rate of nearly 70% compared to urea.

In light of the escalating crisis, the Finance Minister emphasized the need for vigilance regarding the "three Fs": fuel, fertiliser, and forex, particularly due to the ongoing Iran war, which is affecting global markets and increasing domestic prices. She highlighted the importance of Prime Minister Narendra Modi's recent call to conserve foreign exchange reserves.

Regarding the rising prices of fertilisers and gold, she remarked that fertiliser costs have reached unprecedented levels, while soaring gold prices pose additional challenges for India on the international front.

In response, senior Congress leader Jairam Ramesh criticized the Finance Minister's remarks about the three Fs, asserting that she overlooked the crucial fourth F: the declining rates of private investment observed in recent years. He took to social media platform X to express that net FDI flows have decreased, and private corporate investment as a percentage of GDP is now at half of its peak level before 2014. He noted that Indian businesses are increasingly seeking more stable and profitable opportunities abroad, with many corporate leaders relocating overseas.