According to persons familiar with the situation, India is likely to set aside roughly $19 billion in the Union Budget 2022 to compensate fertiliser businesses for selling their products to farmers at below-market pricing.
Due to rising raw material costs, the finance ministry has pencilled in Rs 1.4 lakh crore ($18.8 billion) as fertiliser subsidy in the budget due February 1, up from Rs 1.3 lakh crore in the year ending March 31, the sources said, requesting anonymity because the information is not public. The debate is still ongoing, and a final decision has yet to be made.
The increased spending comes ahead of crucial local polls and amid efforts by the ruling Bhartiya Janata Party to win over farmers after facing massive protests against new laws that have since been scrapped. Nearly 60% percent of India’s 1.4 billion population depends on farming directly or indirectly for their livelihood and their support is key for winning elections.
A finance ministry spokesman was not immediately available for a comment.
The government had substantially raised fertilizer subsidy in the current year amid the protests after allocating nearly Rs 80,000 crore in the budget unveiled in Feb. 2021.