19 March 2018

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Central Government approves continuation of ongoing urea subsidy scheme


The Cabinet Committee on Economic Affairs, chaired by Prime Minister has approved the proposal of Department of Fertilizers to continue Urea Subsidy Scheme upto 2019-2020 at a total estimated cost of Rs. 1,64,935 crore and for disbursement of fertilizer subsidy. The decision is to provide no increase in price of urea, till 2020. Central government aims to ensure adequate and timely availability of fertilizers at affordable prices for maximizing agricultural production in the country. Urea Subsidy is a part of Central Sector Scheme of Department of Fertilizers w.e.f 1st April, 2017 and is wholly financed by the Government of India through Budgetary Support. The continuation of Urea Subsidy Scheme will ensure the timely payment of subsidy to the urea manufacturers resulting in timely availability of urea to farmers. Urea subsidy also includes Imported Urea subsidy which is directed towards import to bridge the gap between assessed demand and indigenous production of urea in the country. Further, it also includes freight subsidy for movement of urea across the country.

Adequate and timely availability of fertilizers to the farmers at affordable prices through planned production and imports and distribution of fertilizers is essential for progress of rural areas of country and for sustainable agricultural growth. The scheme is in continuation to farmer-friendly policies of the Central Government. Earlier, 100% Neem Coated Urea was made mandatory in 2015. Government had earlier notified New Urea Policy, 2015, with the objectives of maximizing indigenous urea production; promoting energy efficiency in urea production; and rationalizing subsidy burden on the government. This led to the highest ever production of 245 LMT during 2015-2016. In effect, 20 LMT of Urea during was additionally produced without adding additional any capacity. These steps have ensured continued easy availability of Urea to the farmers at an affordable price. Today's decision reiterates the commitment of the present Government towards the welfare of the farmers.

Chemical Fertilizers plays a significant role in making the country self-reliant in food grain production and provide a very vital input for the growth of Indian agriculture. For sustained agricultural growth and to promote balanced nutrient application, urea is made available to farmers at statutorily controlled price, which at present is Rs. 5360/- per MT (exclusive of the Central/State Tax & other charges towards neem coating). The difference between the delivered cost of fertilizers at farm gate and MRP payable by the farmer is given as subsidy to the fertilizer manufacturer/importer by the Government of India. At present, there are 31 urea manufacturing units, out of which 28 urea units use Natural Gas (using domestic gas/LNG/CBM) as feedstock/ fuel and remaining 3 urea units use Naphtha as feedstock/fuel.

Tags : Scheme Subsidy Approval

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