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Urea imports may fall in 2022-23, but fertiliser subsidy bill will be bigger

The government’s fertiliser subsidy bill is likely to expand significantly in the current fiscal year as well as in 2022-23, in line with a trend that has seen the actual outlays exceed budget estimates

March 30, 2022 / 06:22 PM IST
Representative image.

Representative image.

International prices of key fertilisers had been on the boil for many months before Russia’s February 24 invasion of neighbouring Ukraine worsened the situation. Supply constraints and a gradual increase in energy prices was to blame for the rising prices; natural gas, for instance, is a key raw material in urea.

Given India’s heavy dependence on imports to meet its fertiliser needs, there is every possibility of the country’s fertiliser subsidy bill increasing in the current fiscal year as well as the next.

According to the Parliamentary standing committee on chemicals and fertilisers, India imports 25% of its urea requirement. Imports also make up a whopping 90% share of the country’s phosphatic fertiliser needs and 100% of potassic fertiliser requirements.

The committee noted that in 2021, the price of urea alone increased from $300 per metric ton (MT) in January to $1,000/MT by December the same year.