Fertilizer costs surge due to Russia-Ukraine conflict: Modi govt claims record-high subsidies to farmers

New Delhi: The ongoing Russia-Ukraine conflict has caused a sharp rise in global fertilizer prices, disrupting supply chains and affecting countries that rely heavily on imports, including India. As Russia is a major exporter of nitrogen, potash, and phosphorus fertilizers, supply disruptions have led to increased costs for importing nations, including India. However, the Modi government has implemented measures to safeguard Indian farmers from the adverse effects of these global price hikes.

Rising fertilizer costs amid the Russia-Ukraine crisis

India, a significant importer of fertilizers, has felt the ripple effects of the geopolitical tension between Russia and Ukraine. Fertilizer prices have surged worldwide, affecting India’s agricultural supply chain. Recognizing the potential impact on Indian farmers, the Modi government stepped in to shield them from bearing the full brunt of these cost increases.

Record-high subsidies to support farmers

To mitigate the impact of the price surge, the Indian government allocated a record ₹2.25 lakh crore in fertilizer subsidies for the fiscal year 2022-23. This substantial subsidy ensured that Indian farmers were not adversely affected by rising international fertilizer prices, keeping domestic agricultural production stable.

FY 2023-24 fertilizer subsidy allocation

The revised estimate for fertilizer subsidies in FY 2023-24 is ₹1.89 lakh crore. Although this figure is slightly lower than the previous year’s allocation, it still reflects the government's strong commitment to protecting farmers. Despite a modest reduction in the planned subsidy, the Modi government increased the Revised Estimates to maintain consistent support.

• ₹2.25 lakh crore (2022-23): This record-high allocation helped insulate farmers from steep global price increases.
• ₹1.89 lakh crore (2023-24 Revised Estimates): Though lower, this revised figure continues to prioritize farmer relief amid fluctuating market conditions.

Trade-offs in developmental funding

While these generous subsidies have shielded farmers from price shocks, they have also created financial constraints. Resources that could have been directed toward job creation, infrastructure development, and social welfare programs were diverted to maintain the subsidy scheme. Sectors such as infrastructure and programs aimed at supporting underprivileged communities have experienced slower funding as the government prioritized immediate relief for the agricultural sector.

Ensuring continuous fertilizer supplies

In addition to subsidies, the Indian government has leveraged diplomatic channels to secure fertilizer supplies. The Modi administration has maintained strong ties with Russia, facilitating a consistent flow of fertilizers despite geopolitical tensions. By boosting imports from Russia, India has been able to minimize disruptions and ensure steady availability of fertilizers for domestic use.

A long-term vision for fertilizer self-sufficiency

While immediate relief remains the focus, the Modi government is also working on long-term strategies to reduce dependence on imported fertilizers. This includes efforts to boost domestic production and promote sustainable agricultural practices that reduce the excessive use of chemical fertilizers. Investments in infrastructure are also key to building a more resilient supply chain in the future.

Balancing immediate relief and long-term stability

The Modi government’s approach to the fertilizer crisis has been twofold—providing immediate relief through subsidies while laying the groundwork for long-term self-sufficiency in the fertilizer sector. While financial resources have been redirected from other development projects, the focus on maintaining food security and economic stability is paramount. The government’s efforts ensure that Indian farmers are shielded from global price volatility while promoting a more sustainable and resilient agricultural future.