New Delhi: The Union Cabinet on Wednesday approved a Rs 700 per bag hike in subsidy for DAP fertiliser and the increase will result in an additional cost of Rs 14,775 crore to the exchequer.
The hike is part of the government's effort to ensure that farmers gets the key soil nutrient at old rates despite rise in global prices.
After urea, Di-ammonium Phosphate (DAP) fertiliser is the most widely one in the country.
Last month, the Centre decided to increase subsidy on DAP fertiliser by 140 per cent. The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi.
Briefing the media, Minister of State for Chemicals and Fertilisers Mansukh Mandaviya on Wednesday said the Cabinet has approved increasing the subsidy amount for DAP fertiliser for the benefits of farmers.
"Farmers will continue to get DAP at the old rate of Rs 1,200 per bag," he said.
One bag has 50 kilograms of the fertiliser.
According to him, the subsidy for DAP fertiliser has been increased to Rs 1,200 per bag from Rs 500 per bag to provide relief to farmers.
The minister also said the additional subsidy burden on the exchequer will be Rs 14,775 crore.
Last year, the actual price of DAP was Rs 1,700 per bag, on which the central government was giving a subsidy of Rs 500. The companies were therefore selling the fertiliser to farmers for Rs 1,200 per bag.
With rise in global prices, the actual price of DAP reached Rs 2,400 per bag. In order to ensure that the farmers get DAP at the old rate of Rs 1,200 per bag, the Centre has decided to increase the subsidy to Rs 1,200 per bag.
Mandaviya said that in the case of urea, the MRP (Maximum Retail Price) is fixed while the subsidy amount keeps changing. On an average, he said the government is providing Rs 900 per bag subsidy on urea.
However, he said the government provides a fixed amount of subsidy on non-urea fertilisers, including DAP.