DAP Subsidy Extension Criticised for Favouring Corporate Profits Over Farmers' Welfare

The All India Kisan Sabha (AIKS) has criticised the Union Cabinet's decision to extend a special subsidy on di-ammonium phosphate (DAP) fertiliser. According to AIKS, this move appears to favour corporate profits rather than safeguarding farmers' interests. The organisation expressed its concerns in a statement, highlighting that the decision benefits corporations more than the agricultural community.

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Fertiliser Price Trends and Subsidy Cuts

The AIKS pointed out that while the maximum retail price (MRP) of urea has remained at Rs 266.50 per 45-kg bag since November 2012, prices for other fertilisers have surged. Muriate of Potash (MoP) prices rose from Rs 4,455 per tonne in 2009-10 to Rs 34,644 per tonne by August 2023. Similarly, DAP prices increased from Rs 9,350 to Rs 27,000 per tonne during the same period.

Over the past three years, fertiliser subsidies have been significantly reduced by a total of Rs 87,339 crore. In the Union Budget for 2022-23, the actual subsidy was Rs 2,51,339 crore. However, the revised expenditure for 2023-24 was only Rs 1,88,894 crore, marking a reduction of Rs 62,445 crore. The estimated subsidy for 2024-25 is further reduced to Rs 1,64,000 crore.

Import Dependency and Global Market Influence

AIKS highlighted India's increasing dependency on imported fertilisers over the last three decades. Domestic production has not kept pace with demand, making India reliant on imports for P&K-based fertilisers. Import shares range from 60% for DAP to a full 100% for MoP. This dependency exposes India's agriculture and food security to international market fluctuations and geopolitical tensions.

The organisation also noted that global corporations control mineral resources and fertiliser production. About 84% of MoP's global supply comes from just seven companies. This monopoly has led to price increases due to profiteering by these suppliers. Studies indicate that fertiliser companies' profit margins reached up to 36% in 2022, the highest since the global crisis of 2007-08.

Rupee Depreciation and Fertiliser Shortages

The depreciation of the rupee has exacerbated the fertiliser crisis in India. AIKS mentioned a significant shortage in fertiliser availability despite government denials. Official data and farmers' experiences reveal a considerable shortfall in supply alongside widespread black marketing.

On Wednesday, the government extended an additional subsidy on DAP beyond December 31, 2024. This measure aims to keep retail prices at Rs 1,350 per bag of 50 kg and could cost up to Rs 3,850 crore. Last year, a one-time special package was announced at Rs 3,500 per tonne from April 1 to December 31, with financial implications of Rs 2,625 crore.

An official statement clarified that this decision ensures sustainable availability of DAP at affordable prices for farmers. The package supplements the nutrient-based subsidy (NBS) set by the government for non-urea nutrients.