April , 2024
Navigating India's agricultural sector: Fertilizer subsidies and the rise of organics
23:28 pm

Kuntala Sarkar

The fertilizer industry plays a vital role in India's agricultural landscape, enhancing output, addressing food security concerns, and supporting rural employment. Since 2014, fertilizer manufacturing in India has experienced consistent growth, with initial figures for fiscal year 2023 showing a notable increase of 9.6% compared to the previous year.

Fertilizer Subsidies

India ranks among the top global consumers of fertilizers, with domestic sales witnessing continuous growth. In response to increasing fertilizer usage and rising prices, the central government allocated a subsidy of Rs.24,420 crore for phosphatic and potassic (P&K) fertilizers in February of this year. This subsidy introduced three new grades to aid farmers, with rates set at Rs.47.02 per kg for Nitrogen (N), Rs.28.72 per kg for phosphatic (P), Rs.2.38 per kg for potassic (K), and Rs.1.89 per kg for Sulphur (S) for the 2024 kharif season. The subsidy for di-ammonium phosphate (DAP) remains unchanged at Rs.4,500 per tonne. However, the fertilizer subsidy allocated in the Union Budget for fiscal year 2024-25 (FY25) amounted to Rs.1.64 trillion, lower than the revised estimate of Rs.1.88 trillion for FY24.

Fertilizer Imports

While India progresses towards self-sufficiency in urea production, it still relies on imports for raw materials such as rock phosphate, ammonia, and phosphoric acid, crucial for DAP and NPK fertilizers. In the fiscal year 2022-2023, fertilizer imports exceeded Rs.1.38 trillion. India annually imports significant quantities of phosphate rock, phosphoric acid, and DAP, with approximately 60% of diammonium phosphate sourced from imports. Despite efforts, imports still fulfill 25% of urea and 15% of NPK fertilizer requirements, highlighting the need to boost domestic production.

Organic Fertilizer Utilisation

Following the Green Revolution in the 1960s, there has been a surge in the use of chemical fertilizers to achieve rapid results. However, the excessive use of urea has led to a depletion of soil fertility over time. In the fiscal year 2022-23, urea constitutes more than half of the total fertilizer production (58.4%), total consumption (57.9%), and 35.9% of imports. Consequently, India is actively promoting the adoption of organic fertilizers. In the period 2021-22, there was a notable expansion in organic agricultural land in India, with 4.73 million hectares dedicated to organic agriculture.

Predicting the exact future percentage of land certified as organic is challenging. However, the government has ambitious plans to convert 14 million hectares of farmland to organic by 2025, constituting approximately 7%-8% of the total agricultural area for principal crops. Key states leading in organic agriculture include Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan. India boasts one of the world's largest bovine populations, including cattle, buffalo, mithun, and yak. This livestock serves as a significant source of organic manure. Other organic fertilizer sources contribute only 4.25 million metric tons, barely meeting 0.5% of India's total nutrient requirements.

However, due to the higher cost of organic fertilizers compared to their alternatives, farmers continue to show a preference for chemical fertilizers. To encourage the adoption of sustainable fertilizers, the government is providing incentives. However, the scope of the incentives and schemes must be expanded in the near future to align with the union government's targets

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