The Indian government's fertilizer subsidy bill is expected to hit a record high of Rs 1.65 lakh crore this fiscal year against the budgeted Rs 1.05 crore, due to an unprecedented rise in the cost of raw materials and world fertilizer prices, according to a CRISIL rating report. 

      

The report notes that the government has been proactive in resolving the situation.

In the last two fiscal years, the government paid an additional Rs 1.2 lakh crore and increased the budgeted subsidy. However, the sharp rise in commodity prices has negated this, and further intervention may be needed this fiscal year. Otherwise, subsidy arrears would reach an all-time high of more than 75 billion rupees by the end of this fiscal year, he said.

     

More than 85 percent of the subsidy arrears could come from urea. In fact, combined gas prices, a combination of domestic gas and imported LNG that is accounted for in billing to fertilizer plants, soared more than 75% last fiscal year and are expected to remain high for most of the year. of the year. -Ukrainian conflict, said Nitesh Jain, Director, CRISIL Ratings. 

"At the same time, urea retail prices remained unchanged, increasing the burden of government subsidies. India's dependence on urea imports by nearly 28% in FY2021."


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