The Modi government is expected to keep its fertiliser subsidy allocation for the 2025-26 fiscal year at close to the current year’s level of ₹1.7 trillion as global prices of key nutrients stabilise.
The Centre initially allocated ₹1.64 trillion to fertiliser subsidies this fiscal, increasing it by ₹6,594 crore in December, bringing the total to ₹1.7 trillion.
The upcoming year’s subsidy, the second largest after food, is likely to remain in this range, finance ministry officials said, citing consistent subsidy utilisation trends.
The officials said the government would start the next fiscal with similar levels of allocation to 2024-25 and are prepared to respond to unexpected spikes in demand or prices.
Fertiliser subsidies account for about 40 per cent of India’s ₹4.28 trillion in central subsidies this year, second only to the ₹2 trillion food subsidy. Cooking gas subsidies account for ₹11,925 crore.
In 2022-23, subsidy spending surged to ₹2.5 trillion as the war in Ukraine disrupted global supply chains and drove up prices of fertilisers and natural gas, a critical component in urea production.
The subsequent moderation in fertiliser prices brought fiscal relief, with the subsidy bill stabilising over the past two fiscals.
In December 2024, the government sought parliamentary approval for additional subsidies on phosphatic and potassic (P&K) fertilisers under the nutrient-based subsidy (NBS) program. The move followed a spike in global prices of diammonium phosphate (DAP), one of most widely used fertilisers.
Meanwhile, the prices of urea and muriate of potash (MOP) — for which India relies entirely on imports —were lower in November than the same period last year, though urea prices saw an uptick earlier in 2024, according to government data.
By the end of November, India had spent ₹1.21 trillion on fertiliser subsidies for the fiscal year, nearly 5 per cent less than in the previous year, reflecting global price trends.
“Given recent increases in raw material and finished fertiliser prices in the P&K segment, the subsidy requirement for FY26 may slightly exceed FY25 levels, reaching approximately ₹1.7 trillion,” said Girishkumar Kadam, a senior vice-president at Icra. Healso noted the government’s likely focus on promoting balanced fertiliser use and reducing dependence on specific nutrients.
India’s fertiliser subsidies have totalled ₹11.9 trillion since 2014, more than double the spending in the previous decade, reflecting a focus on checking fam costs.