Fertilizer subsidy falls by Rs 8,000 cr after Neem coating

Neem coating of urea, one of the key anti-diversion measures introduced by the Narendra Modi government to check the misuse of fertilizer urea by industries, seems to be paying off.

According to the latest numbers, the Indian taxpayer saved about Rs 8,000 cr thanks to the move in the form of lower urea subsidy bill during the year ended March 2017. That works out to a saving of Rs 60 per person.

So far, the total bill for fertilizer subsidy used to increase by around 2% per year, and should have reached Rs 78,000 cr for the year ended March 2017, up from Rs 76,538 cr in the preceding year.

Subsidy on imported urea

However, instead of increasing to 78,000 cr, it fell to 70,100 due largely to a sharp drop in the amount given as urea subsidy to importers.

India gives money to companies that manufacture or import urea to keep the price of the essential agricultural ingredient in check.

However, a large part of the urea was being diverted to industries as raw material, or being transported to neighbouring countries like Nepal and Bangladesh.

To prevent this, the government started spraying urea with Neem oil, which rendered it useless for industrial purposes.

The ingenious solution seems to have paid rich dividends for the country last year, going by the numbers.

The amount spent as urea subsidy during the year was Rs 51,256 cr, compared with Rs 54,600 cr spent in the preceding year.

Similar cost-saving measures put in for phosphate and potash fertilizers also seemed to yield some results, along with an overall decline in their prices.

The total subsidy spent on P&K fertilisers was lower by about Rs 3,000 cr at Rs 18,842 cr during the year.