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Indian Economy

Cabinet approves Rs.62,370 crore rabi fertiliser subsidy and extends credit-guarantee funds

2026-11-15

Illustrative soybean crop, not an Indian rabi field or evidence that fertiliser has been delivered.

India's Union Cabinet approved about Rs.62,370 crore in nutrient-based subsidy support for phosphatic and potassic fertilisers in the 2026–27 rabi season, 64 percent above the previous season's Rs.37,952 crore. The rates apply from 1 October 2026 to 31 March 2027. The special provision intended to keep DAP available at Rs.1,350 per bag continues; this is a subsidy framework, not a direct cash payment of the headline allocation to each farmer.

The official briefing lists per-kilogram nutrient support of Rs.94.21 for nitrogen, Rs.66.11 for phosphorus, Rs.2.38 for potash and Rs.10.42 for sulphur. DAP-related special provisions extend to imported and domestic triple superphosphate and imported monoammonium phosphate. Freight support for single superphosphate and subsidies for imported and domestic ammonium sulphate also continue.

Higher global costs put pressure on the annual allocation

The original annual fertiliser-subsidy estimate was Rs.1.71 lakh crore. Spending in April–September had already reached about Rs.1.19 lakh crore, almost 70 percent of that estimate, including Rs.33,664 crore for nutrient-based support and Rs.85,586 crore for urea. Higher global energy and fertiliser prices following disruption around West Asia have increased pressure on the bill. Reported domestic sales weakened in the first half, with complex fertilisers down 22 percent, DAP 0.6 percent and urea 4 percent; rainfall and El Nino add uncertainty to rabi demand.

A domestic-manufacturer sulphur package covers 20 percent of actual procurement costs, subject to stated floor prices of US$800 a tonne for sulphur and US$266.67 for sulphuric acid, with detailed guidelines to follow. The government says the package aims to maintain supply, encourage domestic production and balanced nutrient use, and reduce import dependence. These are intended effects, not proof that shortages have ended or that every farmer can obtain a bag at a particular dealer.

Separate guarantees support small-business lending

The Cabinet also approved five-year continuation of the Micro Units and Stand-Up India credit-guarantee funds, with Rs.5,000 crore and Rs.4,111 crore respectively. The micro-unit fund supports eligible Mudra loans up to Rs.20 lakh, specified overdrafts and self-help-group loans; its guarantee fee falls to 0.75 percent a year. Stand-Up India covers eligible greenfield loans above Rs.10 lakh up to Rs.1 crore for women and SC/ST entrepreneurs, with an 85 percent guarantee cover and a 0.50 percent annual guarantee fee. Guarantee funding, lender protection, loan ceilings and borrower approval are different things: these decisions do not approve an individual loan or make its interest rate equal to the guarantee fee.

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