New Delhi: India’s fertiliser subsidy bill is likely to exceed Rs 3 trillion in the current financial year if geopolitical tensions in West Asia persist, amid rising concerns over global supply disruptions and input cost pressures.

The projection comes at a time when the Union government is closely monitoring key economic variables, including fuel, fertiliser and foreign exchange reserves, following recent volatility in global markets.

Subsidy burden expected to rise sharply

According to official estimates, fertiliser subsidy expenditure stood at Rs 2.51 trillion in FY23. The latest projections suggest a significant increase in the current fiscal, potentially pushing the total beyond Rs 3 trillion.

If the estimate holds, the subsidy outgo would be nearly Rs 1.29 trillion higher than the FY27 Budget estimate of Rs 1.79 trillion, highlighting the widening gap between projected and actual spending.

The rising subsidy bill reflects both global price pressures and India’s continued efforts to ensure affordable fertiliser access for farmers.

India holds adequate fertiliser stocks, says official

Krishna Kant Pathak, Joint Secretary in the Department of Fertilisers, said India currently has sufficient fertiliser stocks to meet demand.

“India has sufficient stocks of fertilisers, in excess of 20 million tonnes,” he said while addressing a roundtable organised by the Indian Council for Research on International Economic Relations.

He added that India consumes around 70 million tonnes of fertilisers annually, with urea forming the largest component of usage.

Pathak noted that urea efficiency remains a concern, with only about 30 per cent absorption in soil, compared to higher efficiency levels in alternative fertilisers.

Focus on crop diversification and efficiency

Officials have suggested that India could reduce pressure on fertiliser demand by promoting crop diversification, including increased cultivation of pulses and indigenous crops such as ragi and sesame.

Pathak also highlighted the potential of ammonium sulphate as a more efficient alternative, noting its absorption rate is significantly higher at nearly 70 per cent compared to urea.

Experts believe such shifts could gradually reduce dependency on heavily subsidised fertilisers while improving soil health and productivity.

Government monitoring “three Fs” amid global uncertainty

Finance Minister Nirmala Sitharaman has called for close monitoring of the “three Fs” fuel, fertiliser and forex amid rising global uncertainty linked to geopolitical tensions.

She said external shocks, including conflicts in West Asia, are impacting commodity prices and putting pressure on India’s import-dependent sectors.

Sitharaman also highlighted the importance of conserving foreign exchange reserves, noting that global volatility has made macroeconomic stability more critical than ever.

She further warned that rising fertiliser and gold prices were contributing to external sector pressures, even as India continues to maintain stable economic fundamentals.

Debate over investment slowdown

The Finance Minister’s remarks triggered political debate, with Congress leader Jairam Ramesh criticising the government’s economic approach.

He argued that the focus on the “three Fs” overlooks what he described as a “fourth F” — falling private investment.

Ramesh stated that net foreign direct investment flows have declined and private corporate investment as a share of GDP remains significantly below pre-2014 levels. He also claimed that Indian businesses are increasingly looking for opportunities abroad.

The exchange has added a political dimension to an already sensitive discussion on subsidy burdens and macroeconomic management.

Rising fiscal pressure ahead

Economists say the growing fertiliser subsidy bill reflects the government’s continued commitment to protecting farmers from global price shocks.

However, they also caution that sustained high subsidies could add pressure on fiscal management, especially if global energy and commodity prices remain elevated.

India remains one of the largest importers of fertilisers, making domestic prices highly sensitive to international market movements.

With geopolitical risks still unfolding, policymakers are expected to closely track global supply chains and adjust subsidy allocations accordingly.

For now, the fertiliser subsidy remains a key component of India’s rural support system, even as its financial burden continues to rise.