In a decision made in the farmers' interests, the Central government on Wednesday announced an increase in the subsidy for Di-Ammonium Phosphate (DAP) fertiliser by 140 per cent, from Rs 500 per bag to Rs 1,200 per bag.
The decision was taken in a high-level meeting chaired by the Prime Minister on the issue of fertiliser prices which are increasing due to the surge of rates of phosphoric acid and ammonia internationally.
The Prime Minister stressed that "farmers should get fertilisers at old rates despite the international rise in prices".
"A historic decision was taken to increase the subsidy for DAP fertiliser from Rs 500 per bag to Rs 1,200 per bag, which is an increase of 140 per cent," an official statement said.
"Thus, despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs 1,200 and the Central government has decided to bear all the burden of price hike."
The amount of subsidy per bag has never been increased so much at one go.
Last year, the actual price of DAP was Rs 1,700 per bag for which the Central government was giving a subsidy of Rs 500 per bag. So the companies were selling the fertiliser to farmers for Rs 1,200 per bag.
Recently, the international prices of phosphoric acid and ammonia used in DAP have gone up by 60 to 70 per cent. So the actual price of a DAP bag is now Rs 2,400, which could be sold by fertiliser companies at Rs 1,900 after considering the subsidy of Rs 500.
With Wednesday's decision, farmers will continue to get a DAP bag for Rs 1,200.
The Prime Minister observed that his government is committed to the welfare of farmers and will take all efforts to ensure that farmers do not have to face the brunt of price rise.
The Central government spends about Rs 80,000 crore on subsidies for chemical fertilisers every year. With the increase in subsidy for DAP, it will now spend an additional Rs 14,775 crore as subsidy in Kharif season.
This is the second major decision for farmers after directly transferring Rs 20,667 crore in farmers' account under PM-KISAN on the day of Akshay Tritiya.