The budgeted fertiliser subsidy could fall short by at least Rs 35,000 crore in the current fiscal because of the impact of elevated raw material and gas prices along with a depreciation in the rupee.

The already enhanced fertiliser subsidy budget of Rs 215,000 crore for FY2023 is likely to fall short by around Rs 35,000 crore.

“Prices of a majority of the key raw materials for the production of fertilisers remain elevated in H1FY23 on the back of the Russia-Ukraine war,” rating agency CareEdge said in a report.

India is already battling record-high food inflation and economists have expressed concern over the availability of wheat and rice. Production of rice and wheat is expected to decline by 7 million tonnes each compared to FY2022.

The report linked the likely shortfall in the fertiliser subsidy budget to the sharp rise in the price of natural gas which was hiked by 40 per cent on October 1.

Besides, the domestic currency depreciated by 7 per cent against the dollar.