New fertiliser schemes may help lower subsidy bill

This fiscal year, the budgeted fertiliser subsidy is Rs 1.75 lakh crore approximately.

The Union Cabinet is likely to soon approve schemes that may help lower the government’s fertiliser subsidy burden over the next three years, an official said.

The schemes are PM PRANAM, a liberalised Market Development Assistance Scheme and Urea Gold, the government official said, asking not to be identified.

PM PRANAM (PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth) incentivises state governments to reduce the consumption of chemical fertilisers and increase the use of bio and organic fertilisers. The MDA scheme promotes composting.

“The subsidy burden on the government will reduce due to the PM PRANAM and Market Development Assistance schemes,” the official told Moneycontrol.

The schemes, once implemented, may help lower the fertiliser subsidy burden to as low as Rs 1 lakh crore each in FY25 and FY26, the official said. The budgeted fertiliser subsidy is about Rs 1.75 lakh crore for FY24.

States that demonstrate reduced use of chemical fertilisers will get financial incentives.

“If the states reduce consumption of chemical fertilisers as compared to the average of the last three years, 50 percent of the subsidy saved will be transferred to them. The scheme is conditional on chemical fertiliser consumption of neighbouring districts not increasing and the decrease should not be due to any natural calamity,” the official said.

Liquid nano urea

States, which have claimed they faced a shortage of funds for projects since the pandemic, will be free to use this monetary incentive as capital expenditure. PM PRANAM, combined with the use of liquid nano urea, is likely to save the Centre Rs 19,000 crore over three years, the official said.

Liquid nano urea, a nitrogen fertiliser that is said to be cheaper and more efficient, holds the promise of lowering imports of granular urea substantially. Liquid nano urea, developed using nanotechnology, can improve the efficiency of crop nutrients.

Under the liberalised MDA scheme, which promotes composting in cities, the total outlay targeted is Rs 1,451 crore over three years, including FY24, the official said. An assistance of Rs 1,500 per tonne will be provided to compost manufacturers. The scheme is likely to be expanded to organic waste including biogas, green manure, and composting in rural areas. The scheme will promote the use of alternative fertilisers and complement the Swachh Bharat Mission.

The Cabinet will also likely approve Urea Gold, or sulphur-coated urea, soon. This product will be sold at market rates. The details of cost and bag size will be worked out later, the official said.