Fertiliser Subsidy Spending Hits 56% Of FY27 Budget In 4.5 Months Amid High Global Prices

India's fertiliser subsidy expenditure has surged in the opening months of the current financial year, with the government using nearly 56% of its annual allocation within the first four-and-a-half months.

Higher international prices of finished fertilisers and LNG, a key feedstock for domestic urea manufacturing, have contributed to the rise in spending.

According to a report by Business Standard, the government has spent around ₹99,000 crore so far, raising concerns that the fertiliser subsidy bill could exceed the ₹1.77 lakh crore budgeted for FY27.

Urea accounts for bulk of subsidy spending

Of the total expenditure, approximately ₹77,871 crore has been directed towards urea, covering both imports and domestic production. Another ₹21,255 crore has been spent on DAP, Muriate of Potash (MoP) and NPK fertilisers, including their imports and domestic manufacturing.

Officials said the government had initially faced the possibility of a substantial increase in subsidy requirements when tensions involving the US, Iran and Israel pushed global fertiliser and energy prices higher.

However, the outlook has improved in recent months as international urea prices have declined significantly from their April peak. Increased global availability and diversification of India's import sources have helped reduce costs.

The landed price of imported urea has fallen by around 60% to $390 per tonne, compared with nearly $1,000 per tonne in April.

India remains heavily dependent on imports

India's dependence on overseas supplies remains significant, with around 70% of domestic fertiliser requirements and raw materials sourced through imports.

This leaves government subsidy expenditure sensitive to international commodity prices, shipping costs and geopolitical developments.

India consumed more than 700 lakh tonnes of various fertiliser products in FY26, highlighting the scale of the country's agricultural input requirements.