India’s fertiliser subsidy faces unprecedented surge as global prices climb
India’s fertiliser subsidy bill is poised to overshoot budget targets by ₹70,000 crore, driven by international price surges and continued import reliance. The government is prioritising farmer affordability despite fiscal strain, highlighting the need for greater self-reliance.
India’s agricultural backbone is coming under financial strain as government projections indicate the fertiliser subsidy bill could dramatically overshoot budget estimates this fiscal. Behind this surge lies a convergence of global price shocks, geopolitical instability, and India’s heavy reliance on imports for key fertiliser components—a perfect storm with major economic and policy ramifications.Mounting fiscal pressures amid soaring global pricesDepartment of Expenditure, India’s total fertiliser subsidy outlay is projected to climb to approximately ₹2.4 lakh crore in the current fiscal year, surpassing the Union Budget’s allocation of ₹1.71 lakh crore by close to ₹70,000 crore. This spike is primarily attributed to a sharp rally in international prices for di-ammonium phosphate (DAP) and urea, the two essential nutrients underpinning Indian crop yields.agriculture, have escalated after supply routes were compromised, further compounded by increased freight costs. CareEdge Ratings reported that since March 2026, urea prices have jumped 85 percent to 950 dollars per tonne, while DAP has surged 30 percent to 900 dollars per tonne. Prices of key raw materials, including ammonia and sulphur, have also witnessed significant hikes, rising 60 percent and 50 percent respectively.Heavy import dependence exacerbates risksIndian Potash Ltd’s agreement to buy 1.35 million tonnes of DAP at 930 to 935 dollars per tonne, highlight the urgency and scale of these efforts. These shipments, largely originating from Saudi Arabia, Russia, Egypt, and Morocco, represent nearly a quarter of India’s annual DAP imports.Government’s commitment to farmer affordabilityBroader implications for fiscal management and policyLooking ahead: A call for self-reliance and innovation