West Asia shock to fertilizer subsidy bill

In case of closure of Strait of Hormuz, imports of fertilizers from countries in the region may get impacted

- Vijay C. Roy & Gireesh Chandra Prasad

India's ₹1.68-trillion fertilizer subsidy bill for the current financial year could rise if the crisis in West Asia causes natural gas prices and shipping costs to escalate, even as farmers cheer forecasts of a good monsoon.

While the government makes tentative estimates of the subsidy bill at the beginning of the financial year—based on sowing and irrigated area and past demand—there is an implicit commitment to scale it up to meet unforeseen circumstances.

"Fertilizer prices are expected to go up, which might require higher subsidies," said an official at Indian Farmers Fertilizer Cooperative Ltd (IFFCO). In the past, the government has been making special financial provisions for additional subsidies in case of a spike in global prices.