India faces urea crisis as Rs 3 trillion subsidy bill looms

Indian farmers use more urea than the US and Brazil combined, but the government's subsidy bill is set to exceed Rs 3 trillion this fiscal year, nearly double the budgeted Rs 1.71 trillion, businesstoday.in reports. A 45-kg bag costs farmers just Rs 266.5, less than a tenth of the government's procurement price in an April tender, after disruptions to fertilizer flows through the Strait of Hormuz and rising natural gas import costs.

Prime Minister Narendra Modi has urged farmers to cut urea use by half to save soil health, and the agriculture ministry ran a nationwide campaign in June. But farmers like Sukhbir Ram say reducing use hurts yields, and many plan to use urea as usual. Soil tests show more than half of 9 million samples had low organic carbon, a sign of fertility loss from excessive fertilizer use.

Shortages are visible during peak season in July and August. Ram's cooperative supplied only three bags per acre instead of the five he needs. The Indian Council for Research on International Economic Relations has forecast the subsidy could reach Rs 3.32 trillion if West Asia tensions persist.