The Centre increased its share of subsidy for di-ammonia phosphate (DAP) by 140 per cent from Rs 500 to Rs 1,200 per bag, thereby rolling back the steep 58 per cent hike in prices announced by companies since April. The decision taken at a meeting chaired by the Prime Minister comes in the backdrop of farmers’ agitation.

What

  1. The higher subsidy will allow fertiliser companies to sell DAP at the old rate of Rs 1,200 against the new price of Rs 1,900 per bag that was applicable from 1 April 2021.
  2. Thus, despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs.1200 and the central government has decided to bear all the burden of price hike. The amount of subsidy per bag has never been increased so much at once.
  3. The government’s move comes a month after the fertiliser companies announced a sharp hike in the DAP prices.
  4. On 8 April, Indian Farmers Fertiliser Cooperative (IFFCO), had raised the maximum retail price of a 50-kg DAP bag by 58 per cent — from Rs 1,200 per bag to Rs 1,900 per bag — with the new price effective from 1 April 2021.
  5. The Centre had urged the fertiliser industry to maintain retail prices of DAP at “reasonable” levels.
  6. Recently, the international prices of phosphoric acid, ammonia etc. used in DAP have gone up by 60% to 70%. So the actual price of a DAP bag is now Rs 2400, which could be sold by Fertilizer companies at Rs 1900 after considering a subsidy of Rs 500.
  7. The increase in subsidy for DAP fertilisers will mean an additional burden of Rs 14,775 crore on the government in the upcoming kharif season.