Budget 2023: Govt may increase urea subsidy to tide over supply deficit | Exclusive

Budget 2023: Ahead of the Union Budges 2023-24, Zee Business has learned that the government could announce to increase the subsidy on urea in order to provide relief to the farmers amid supply constraints due to global factors. The decision will also benefit fertiliser companies that are facing margin pressure.

Urea is used as a fertiliser and feed supplement. Besides, it is also used as a starting material for manufacturing plastics and drugs.

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As per the report, fertiliser companies with low production costs like Rashtriya Chemical Fertilizer Ltd (RCF), Chambal Fertilizers and Chemicals, and National Fertilizer Ltd (NFL) will benefit from the decision.

The report mentioned that the government may increase urea subsidy from Rs 268 per kg to Rs 288 per kg.

In Budget 2022-23, the fertiliser subsidy bill was estimated at Rs 1.05 lakh crore. 

Due to a sharp increase in global prices of fertiliser, the government provided an additional fertiliser subsidy of Rs 1.10 lakh crore in May 2022 to further cushion farmers from the price rise.

India being the top importer of urea, imports about 30 per cent of its average 35 million tonnes of the annual consumption of the crop nutrient.

India imports urea from a number of countries, including Oman, Qatar, Saudi Arabia and UAE.

In November 2022, Minister of Chemicals and Fertilizers Mansukh Mandaviya said that due to higher global prices, India's fertiliser subsidy bill for FY23 would rise to a record Rs 2,25,000 crore ($27.21 billion) from the previous year's about Rs 1,50,000 crore.

Individually, shares of fertiliser company RCF declined over 1 per cent to quote Rs 134.45 per share, Chambal Fertilizers and Chemicals shares gained over 1 per cent at Rs 315.25 apiece and NFL share rose around 1 per cent at Rs 63.50 apiece.

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