India has earmarked an additional 650 billion rupees ($8.71 billion) in fertilizer aid for the current fiscal year, which began in April, Finance Minister Nirmala Sitharaman said Thursday.
The government has decided to allocate the additional subsidy so as to ensure that there is adequate availability of fertilizer for farmers, Sitharaman said in announcing a third round of fiscal stimulus to help stressed sectors struggling with the global COVID-19 pandemic.
Demand for fertilizer has begun to rebound in October and November, when farmers plant their winter crops such as wheat and canola.
Fertilizer consumption was high in the summer season, as favorable monsoon rains encouraged millions of farmers to plant more areas with crops such as rice, corn, cotton, soybeans and sugar cane.
Since farmers are likely to expand the areas planted with winter crops due to the abundant soil moisture, demand for fertilizers is expected to increase again in the coming winter season.
“It was the best announcement we could have hoped for,” said the director general of the Fertilizer Association of India, Satish Chander.
In the budget for the current fiscal year 2020-21, presented in February, the government cut its allocation for fertilizer subsidy by 11% to 713.09 billion rupees.
Because of lower budget allocations, India often overtakes its fertilizer subsidy bill, which is carried forward to next year, and the government often asks banks to finance subsidy gaps.
This invariably delays subsidy payments to fertilizer companies.