Fertilizer Subsidy Allocation FY-2026

• Projections on Allocation:
  • The fertilizer subsidy for FY26 is likely to remain more or less the same as FY25’s ₹1.7 trillion.
  • The original allocation will likely remain intact with this year’s trend and will undergo revision against any unpredicted increase of prices.

• Contextual Update and Trends:
  • Current fiscal update
    • For the original FY25 allocation of ₹1.64 trillion, an additional ₹6594 crore was added to the budget in December.
  • As of November 2024, ₹1.21 trillion had already been consumed for (74% of FY25 allocation)
  • Essential drivers for the subsidy
    • This results in India importing fertilizers muriate of potash and natural gas to grant it import subsidy also.
  • Retail Price Controls
    • Retail prices of urea are charged by government, rather subsidy levels are fixed to other nutrients under NBS.
  • Global Market Demand
    • India contributes around 20% of the entire international DAP.

• Analysts’ Views:
  • Subsidy Requirement Is under Control: The Centre has been containing the subsidies on its end for many years.
  • Prices of fertilizers like urea and muriate of potash had gone down at the end of November 2024. thereby, this tendency towards price stability would signal that subsidy trend would remain likely to be stable for FY26.

• Policy and Budget ramification:
  • Stable subsidy allocation ensures stability within the fiscal budget along with appropriate support to farmers.
  • Continued tracking of global price trends as well as geopolitical factors would lead to successful management of subsidy allocation.

Diammonium Phosphate (DAP) Fertilizer