Finance Minister Nirmala Sitharaman on February 1 set aside Rs 1.75 lakh crore for fertiliser subsidies in the budget for the financial year 2023-24, which was 22 percent lower than Rs 2.25 lakh crore for FY23.
Share prices of Chambal Fertilisers, National Fertilisers, GSFC and Rashtriya Chemicals and Fertilisers fell 3-4 percent after the budget documents were released on the completion of the minister's speech.
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Fertiliser subsidy is the payment made to manufacturers or importers to cover the excess cost of production or import and distribution (or cost of supply) over a low maximum retail price (MRP), which is directed by the Centre, charged from the farmers.
Fertiliser stocks had run up over the past few days in anticipation of an import duty cut on some key raw materials.
Also Read: Union Budget 2023: FM allocates Rs 1.75 lakh crore to fertiliser subsidies
Market participants expected the Budget 2023 to include changes aimed at making domestic phosphatic fertiliser manufacturers more competitive by reducing import duties on raw materials like phosphoric acid and ammonia.
India is one of the largest importers of fertiliser, which it needs to boost the yield of its vast farm sector which makes up about 15 percent of its economic output.
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