The amount could go up even further if international prices increase in the later part of the year, the official said on the condition of anonymity. Experts called for decontrol or quantitative restrictions.
The ongoing West Asia crisis has pushed up the international prices of key soil nutrients such as urea and di-ammonium phosphate (DAP) along with critical raw materials like ammonia, sulphur, phosphoric acid and natural gas. The sharp fall of the rupee against the dollar has also added to the burden, experts said.
India imports over 80% of its DAP requirements and for urea domestic production covers only 30-35% of total demand, making it the largest importer of chemical fertilisers.
Unlike most commodities, fertilisers are sold below cost in India to ensure affordability for farmers, with the government giving post-sales subsidies to companies.
India’s dependence on fertiliser imports is around 68-70%, according to Ashok Gulati, distinguished professor at Indian Council for Research on International Economic Relations (ICRIER).
With urea import costs nearly doubling in a matter of weeks due to supply disruptions caused by the effective closure of the Strait of Hormuz, the government’s subsidy burden shot up sharply.De-risking Fertiliser
Experts have questioned the rationale for suppressing fertiliser prices.
Extremely low selling prices of urea (nitrogen) compared to phosphate (DAP) and potassic fertilisers (MOP) has led to imbalanced use of fertilisers and diversion of urea to non-agricultural purposes, according to a paper released by ICRIER on Monday.
India sells urea at less than 10% of its actual cost, making it the preferred choice for farmers.