Food and Fertiliser subsidy declines in FY 2024 - Economic Survey
Jul 22, 2024
New Delhi [India], July 22 : The Economic Survey 2023-24, released by Finance Minister Nirmala Sitharaman on Monday, reveals a significant decline in expenditure on food and fertiliser subsidies, which fell by 24.6 per cent and 22.4 per cent respectively in FY24. Additionally, the expenditure on major subsidies decreased by 22.1 per cent year-on-year.
The survey attributes the decline in fertiliser subsidies to the resolution of supply chain disruptions caused by the Russia-Ukraine conflict, which led to a steep increase in fertiliser prices in FY23. With supply chains adapting, fertiliser prices returned to pre-conflict levels in FY24, resulting in a lower subsidy outlay. Similarly, the additional food subsidy, introduced to protect vulnerable populations, has been gradually consolidated.
The survey underscores the crucial role subsidies play in influencing farmer behaviour, such as adopting better quality seeds, using appropriate fertiliser compositions, and improving access to farm machinery through custom hiring centres. Between 2011-12 and 2020-21, subsidies to the agriculture sector more than doubled, with the fastest increase seen in fertiliser and power subsidies.
The Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) has provided credit-linked financial assistance to build efficient supply chain management from farm to retail, reducing wastage of perishable produce and extending food shelf life. By the end of March 2024, 1,044 projects were completed under PMKSY, with a total of 1,685 projects approved, involving a project cost of Rs 32.78 thousand crore and an approved subsidy of Rs 9.3 thousand crore.
The survey also highlights efforts to reduce the use of chemical fertilisers in Indian agriculture. Although the per-hectare usage of agricultural chemicals in India remains lower than in most developed countries, the use of chemical fertilisers has increased over the years.
The survey added that the current subsidy structure has led to an increased application of urea, resulting in a nutrient imbalance in the use of nitrogen-phosphorus-potassium (NPK), which affects fertiliser efficiency, soil quality, and environmental health. Revising subsidy policies to support all major nutrients (N, P, K) could incentivize farmers to adopt a more balanced fertiliser approach.
The survey also highlighted that to promote precise fertiliser application, more than 1.79 lakh drone demonstrations were conducted across several states by the government to build knowledge and capacity among farmers.
