The central government increased the subsidy for di-ammonium phosphate fertilizer to Rs1,200 per bag from Rs500 per bag on Thursday, causing fertilizer companies' stocks to rally.
Fertilizer prices are rising as raw materials such as phosphoric acid and ammonia, among others, rise in price. The actual price of DAP last year was Rs1,700 per pack. In which the Central Government provided an Rs500 per bag subsidy. As a result, the fertilizer companies were selling it to farmers for Rs1200 per container.
Fertilizers & Chemicals Travancore Ltd (FACT) rose 6.49 percent, Rashtriya Chemicals & Fertilizers rose 6.25 percent, Chambal Fertilisers & Chemicals rose 4.44 percent, Deepak Fertilisers & Petrochemicals Corporation rose 4.46 percent, Khaitan Chemical rose 4 percent, and Gujarat Narmada Valley Fertilizers rose 1.99 percent in response to the news.
In addition to the Rs 80,000 crore spent annually on fertilizer subsidies to farmers, the decision would cost the government Rs 14,775 crore.
PM Modi said that his government is dedicated to the welfare of farmers and will make every effort to ensure that they are spared the brunt of price increases.
This is the government's second big decision in favour of farmers, following the direct transfer of Rs. 20,667 crore to farmers' accounts under PM-KISAN on Akshay Tritiya day.