Pricier Gas Likely To Increase Fertiliser Subsidy Bill, Says Report

The centre's fertiliser subsidy bill is expected to rise further due to a perpetual increase in the rates of pooled natural gas, as per the report by Crisil Ratings. 

The increased rates could be as much as Rs 40,000 crore over the original allotted budget of Rs 1.05 trillion and Rs 1.1 trillion subsidy, which was announced in May 2022.

Fertiliser subsidy works as the major component of the government's overall subsidy bill as it includes food subsidy also. Any delay in increased allocation and disbursement would create disturbances as it would require more working capital and moderate credit metrics of fertiliser makers, the report further stated. 

The retail selling price of urea is kept as low as 85 per cent being the main component in fertiliser production so the farmers use more fertilisers to enhance the crop yield. The centre has been active in managing the subsidy requirements of industry, the report said. 

The price of pooled gas has inclined up to 10 per cent quarter-on-quarter in September 2022, besides, each dollar's up against the rupee, costs the centre Rs 7,000 crore on domestically produced urea, the report said