InvestorQ : Why has the government given a higher subsidy on DAP fertilizers?
diksha shah made post

Why has the government given a higher subsidy on DAP fertilizers?

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sara Kunju answered.
4 weeks ago
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The central government has increased its share of subsidy for the Di-Ammonia Phosphate or DAP from Rs.500/bag to Rs.1200/bag i.e. nearly 140% higher. This virtually rolls back the 58% hike in prices which fertilizer companies had announced since Apr-21. Thanks to this higher fertilizer subsidy, the fertilizer manufacturers will be able to sell DAP at the old rates of Rs.1200/bag rather than their enhanced rate of Rs.1,900/bag.

DAP rates were hiked by the fertilizer companies because they did not have a choice on account of a spike in input prices. For example, international prices of phosphoric acid and ammonia, which are key inputs for DAP, spiked by 70% in the last few months. This is to compensate the fertilizer manufacturers for the higher input costs and protect the farmer. It would imply an additional fertilizer subsidy of Rs.14,775 crore in FY22 above Rs.80,000 crore.

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