Government Extends Additional Subsidy on DAP

Context

In a bid to provide continued relief to farmers and ensure the affordability of fertilisers, the Indian government has extended its additional subsidy on Di-Ammonium Phosphate (DAP) beyond December 2024. This move will enable fertiliser companies to keep the retail price of DAP, avoiding a price hike that could have impacted the agricultural sector.

What is DAP?

Di-Ammonium Phosphate (DAP) is one of the most commonly used fertilisers in India, second only to
It is rich in two essential nutrients for plants: phosphorus and nitrogen, both of which play a crucial role in the growth of crops.
Properties:
- It is a very popular fertilizer because of its excellent physical properties and nutrient content.
- It is free flowing, dust-free and does not normally give any storage problem.
- DAP is almost water-soluble and ultimately leaves acid effect on soils because of ammonia (NH4) it contains.
- DAP on incorporation into soil, reacts with water and gets converted into HPO4 and NH4.
- Ammonium (NH4) follows the same routes as in case of urea.
- Phosphorus in DAP is present in best available from (HPO4).
- Depending upon the soil reaction (pH), phosphorus exists in 3 forms which can be absorbed by plant roots.
- These are HPO4, H2PO4 and PO4. Phosphorus, which is immobile in soil, is not subjected to leaching losses.
DAP is widely used to support the development of strong root systems, enhance flower and fruit production, and improve overall crop health.
Due to its significant role in Indian agriculture, DAP is in high demand across the country, particularly during the Kharif and Rabi
India imports around half of its annual DAP requirement, which amounts to 11 million tonnes. The cost of DAP has been volatile due to factors such as geopolitical tensions and increased transportation costs for raw materials, which has led to higher prices for imported DAP.

Fact Box:

About Fertilisers

Fertilisers are basically food for crops, containing nutrients necessary for plant growth and grain yields.
Balanced fertilisation means supplying these following nutrients in the right proportion, based on soil type and the crop’s own requirement at different growth stages.
Primary (N, phosphorus-P and potassium-K)
Secondary (sulphur-S, calcium, magnesium)
Micro (iron, zinc, copper, manganese, boron, molybdenum)
India is among the world’s largest buyers of fertiliser, besides China, Brazil, and the US.
India imports four types of fertilisers:
Urea
Diammonium phosphate (DAP)
Muriate of potash (MOP)
Nitrogen-phosphorous-potassium (NPK)

Government Policy for Fertilizer Subsidy in India

Nutrient-Based Subsidy (NBS) for P&K Fertilizers: Introduced in 2010, the Nutrient-Based Subsidy (NBS) scheme provides subsidies based on the nutrient content of P&K fertilizers, including DAP. The prices are set by companies but are monitored by the government to ensure they remain affordable for farmers. This system allows companies flexibility in production and import based on market conditions.
Special Subsidy Packages for DAP: Due to geopolitical issues affecting the cost of DAP, the government approved a one-time special package to ensure affordable prices. This subsidy is in addition to the NBS rates and helps offset the higher procurement costs of DAP.
Urea Subsidy: Urea is provided at a fixed MRP of Rs 242 per 45 kg bag, unchanged since 2018. The government compensates urea manufacturers for the difference between the cost and the price farmers pay, ensuring continued availability at subsidized rates.
PM-PRANAM for Sustainable Fertilizer Use: Launched in 2023, the PM-PRANAM scheme encourages states to reduce chemical fertilizer consumption by offering grants for savings. The initiative promotes organic farming and resource conservation technologies to ensure long-term sustainability in agriculture.
Promotion of Organic Fertilizers: The government also provides Rs 1,500 per MT under the GOBARdhan initiative to promote organic fertilizers. The scheme supports biogas plants and aims to reduce dependence on chemical fertilizers, contributing to sustainable agriculture.

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GS Analyst: Daily Current Affairs

02nd January 2025 (9 Topics)

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Government Extends Additional Subsidy on DAP

What is DAP?

Fact Box:

Still Have Questions?

GS Analyst: Daily Current Affairs

Government Extends Additional Subsidy on DAP

What is DAP?

Fact Box:

Still Have Questions?

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