The Cabinet Committee on Economic Affairs (CCEA) has approved continuation of Urea Subsidy Scheme from 2017 upto 2020 and implementation of Direct Benefit Transfer (DBT) for disbursement of fertilizer subsidy.
Key Facts
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The continuation of the urea subsidy scheme will ensure timely payment of subsidy to urea manufacturers resulting in timely availability of urea to farmers at statutory controlled price.
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Implementation of DBT in Fertilizer Sector will reduce diversion of fertilizers to non-agricultural use and plug leakages.
Urea Subsidy Scheme
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Urea Subsidy is part of Central Sector Scheme (CSS) of Department and is wholly financed by Central Government of India through budgetary support.
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It also includes Imported Urea subsidy which is directed towards import to bridge gap between assessed demand and indigenous production of urea in the country.
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It also includes freight subsidy for movement of urea across the country.
Background
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The use of chemical fertilizers have played pivotal role in making India self-reliant in food grain production and provide very vital input for growth of Indian agriculture.
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For sustained agricultural growth and to promote balanced nutrient application, urea is made available to farmers at statutorily controlled price.
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The fertilizer subsidy mainly is difference between delivered cost of fertilizers at farm gate and MRP payable by farmer.
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It is given to fertilizer manufacturer/importer by Central Government.
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At present, there are 31 urea manufacturing units, out of which 28 urea units use Natural Gas as feedstock/fuel and remaining 3 urea units use Naphtha as feedstock.