Parliamentary panel seeks to allocate realistic fertilizer subsidy funding at budget estimate stage

NEW DELHI: A parliamentary panel has recommended that the finance ministry allocate funds for fertilizer subsidy during the budget estimate (BE) stage to ensure that the allocation is as close as possible to the actual demand.In a report to parliament on Friday, the Standing Committee on Fertilizers said the practice of rolling out parking subsidies into the following year’s liabilities also distorted the true picture of government subsidy spending. The panel recommended increasing domestic production given the higher subsidy payments for imported urea and other soil nutrients.“The committee observed that the subsidy burden per bag of imported urea is approximately Rs 2,100 per 45 kg bag, which is much higher than the subsidy of approximately Rs 1,397 per bag for domestically produced urea. The significant difference arises from international urea price fluctuations, freight and insurance costs, port handling charges and exchange rate fluctuations,” the report said.Similarly, in the case of phosphate and potassium fertilizers (NPK), subsidy expenditures are higher for imported varieties than for domestic soil nutrients.The fertilizer department informed the Lok Sabha on Friday that urea imports from Russia increased from 0.92 million tonnes in 2024-25 to 1.4 million tonnes in February, while China’s urea imports jumped from 100,000 tonnes to 2.12 million tonnes. Imports of nitrogen, phosphorus and potassium from China have also increased from less than 100,000 tonnes in 2024-25 to 960,000 tonnes this fiscal.Seeking a realistic and up-front budget allocation for subsidies, the panel noted that in FY24, against a BE (budget estimate) of Rs 180 crore, the final allocation was revised upward to nearly Rs 200 crore, while in FY26, the BE of Rs 180 crore for fertilizer subsidy was revised to Rs 220 crore.