Government has already spent over ₹1.32 lakh crore on fertiliser subsidies in the first half of FY27, accounting for nearly 77% of the annual budget allocation.
Highlights
- India’s fertiliser subsidy bill may exceed ₹2.5 lakh crore in FY27.
- Government allocated ₹1.71 lakh crore for fertiliser subsidies in the Union Budget.
- Over ₹1.32 lakh crore has already been spent in the first six months.
- Rising global urea prices are increasing the subsidy burden.
- Higher fertiliser imports and domestic consumption are adding pressure.
- Subsidy spending could surpass the previous record of ₹2.52 lakh crore in FY23.
New Delhi, October 28: India’s fertiliser subsidy expenditure is expected to rise sharply in the financial year 2026-27, potentially exceeding ₹2.5 lakh crore as rising global urea prices, higher imports and increased domestic demand put additional pressure on government finances.
According to a report published in The Economic Times, the projected expenditure would significantly exceed the government’s budget allocation of ₹1.71 lakh crore for fertiliser subsidies in FY27.
The government has already spent more than ₹1.32 lakh crore during the first half of the current financial year, accounting for nearly 77% of the total annual allocation.
Rising Global Urea Prices Increase Costs
One of the major factors behind the expected increase in subsidy expenditure is the rise in international urea prices. India depends partly on imported fertilisers to meet domestic agricultural requirements, making government expenditure sensitive to global market fluctuations.
The government supplies urea to farmers at controlled prices and bears the difference between the actual cost and the subsidised selling price.
As international prices rise, the subsidy required to maintain affordable fertiliser prices also increases.
Higher Demand Adds to Subsidy Burden
Apart from rising international prices, increased domestic fertiliser consumption and higher import requirements are contributing to the growing subsidy bill.
Agricultural demand for urea remains strong, particularly during major cropping seasons when farmers require large quantities of fertilisers.
According to the report, subsidy expenditure could surpass the previous record of ₹2.52 lakh crore registered in FY23 if current trends continue.
Government Finances Under Pressure
The sharp rise in fertiliser subsidy requirements could create additional challenges for the government’s fiscal management.
With a substantial portion of the annual allocation already utilised, the government may need supplementary budgetary provisions to meet subsidy obligations during the remaining months of FY27.
However, fertiliser subsidies continue to play an important role in supporting farmers and protecting agricultural production from fluctuations in international fertiliser prices.
The final subsidy bill will depend on global urea prices, import volumes, domestic consumption and government procurement costs.
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