What is a Urea Subsidy?
- Urea Subsidy enables farmers to purchase Urea at a price lower than the MRP (Maximum Retail Price). It is any natural, organic, or inorganic material that provides one or more of the chemical/nutritional ingredients required for plant development. Urea, sometimes known as carbamide, is the carbonic acid diamide. It has the formula H2NCONH2.
- Farmers are given Urea at a legally mandated Maximum Retail Price (MRP). The recommended retail price (MRP) for a 45-kilogram bag of Urea is Rs. 242 per bag, while the recommended retail price (MRP) for a 50-kilogram bag of Urea is Rs. 268 per bag. These prices do not include any fees or taxes that may be imposed (exclusive of charges towards neem coating and taxes as applicable).
Benefits and Aim of Urea Subsidy
A farmer gets a fertilizer subsidy if they buy the product at a price lower than the MRP (Maximum Retail Price), which means that the price is lower than the average demand-and-supply rate or the typical cost of production and import. Even though the farmer is the one who eventually benefits, the fertilizer subsidy is given to the corporation that makes fertilizer.
A sharp increase in the global prices of urea, di-ammonium phosphate (DAP), and muriate of potash (MoP) in the last year may cause India’s fertilizer subsidy costs to reach Rs 2 trillion in 2022-23, according to a statement made by an official in the fertilizer ministry.
Compared to a smaller range of about ‘70,000-80,000 crore in the preceding few years, the annual budget expenditure on fertilizer subsidy will be much more than the mark of Rs 1 trillion in 2022-23. This will be the third year in a row that this will be the case.