The Union Cabinet, chaired by the Prime Minister Narendra Modi has approved the proposal of the Department of Fertilizers for fixing the Nutrient Based Subsidy (NBS) rates for Rabi Season 2023-24 (from 01.10.2023 to 31.03.2024) on Phosphatic and Potassic (P&K) fertilizers.

In the upcoming Rabi season 2023-24, an expenditure of Rs.22,303 crore is expected on NBS.

The subsidy on P&K fertilizers will be provided based on approved rates for Rabi 2023-24 (applicable from 01.10.2023 to 31.03.2024) to ensure smooth availability of these fertilizers to the farmers at affordable prices. The availability of fertilizers to farmers at subsidized, affordable and reasonable prices will be ensured. Rationalization of subsidy on P&K fertilizers in view of recent trends in the international prices of fertilizers and inputs.

The government is making available 25 grades of P&K fertilizers to farmers at subsidized prices through fertilizer manufacturers/importers. The subsidy on P&K fertilizers is governed by NBS Scheme w.e.f 01.04.2010. In accordance with its farmer friendly approach, the Government is committed to ensure the availability of P&K fertilizers to the farmers at affordable prices. In view of the recent trends in the international prices of fertilizers & inputs i.e. Urea, DAP, MOP and Sulphur, Government has decided to approve the NBS rates for Rabi 2023-24 effective from 01.10.23 to 31.03.24 on Phosphatic and Potassic (P&K) fertilizers. The subsidy would be provided to the fertilizer companies as per approved and notified rates so that fertilizers are made available to farmers at affordable prices.

Sabysachi Majumdar, Senior Vice President & Group Head - Corporate Ratings, ICRA Limited, says:"The subsidy announced by the Government of India (GoI) under the Nutrient Based Subsidy (NBS) scheme for the ongoing rabi season has been revised downwards as there was a softening in the input prices and finished fertilizer prices. The subsidy for Di-Ammonium Phosphate (DAP), which was Rs. 48,431/MT for the rabi season of FY2023 and Rs. 32,540/MT for the Kharif season of FY2024 has now been further moderated to Rs. 18,041/MT. As the prices of the key inputs and finished fertilizers in the international markets have started to rise again, the revised subsidy rates are likely to result in pressure on the contribution margins of DAP at current prices. There has been a moderation in the subsidy for other phosphatic fertilisers as well in accordance with the revised NBS rates. Accordingly, any material reduction in the MRP of Muriate of Potash (MOP) could further affect profitability. Thus, the revised NBS rates for this rabi season will likely result in some headwinds for the profitability of the phosphatic fertilizer players.

The subsidy for P&K fertilisers for the rabi season stands at around Rs. 22,303 crore, which, coupled with the subsidy for the Kharif season, makes the total requirement at around Rs. 60,300 crore, exceeding the budgetary allocation of Rs. 44,000 crore for the full year."