Fertiliser  Subsidy Backlog is likely to get reduced in CY20

Of the total budgetary allocation (Rs. 800 billion in the Union Budget for FY2019-20), GoI had released nearly 84% by the end of October 2019.

Nirmala Sitaraman GoI needs to increase the budgetary allocation in the upcoming Union Budget for FY2020-21 to around Rs.100 billion in order to reduce the subsidy backlog.

The total requirement of the fertiliser subsduy which stands at around ~Rs. 1250 billion.

The increased budgetary allocation if continued for a couple of years will wipe out the subsidy backlog and pave the way for implementation of the true form of Direct Benefit Transfer (DBT) in the fertiliser sector.

The outlook for fertiliser sales in the current rabi season remains healthy with DAP/NPK offtake expected to grow at a robust pace as there has been significant moderation in the retail prices Y-o-Y driven by a fall in the raw material prices. Urea demand is expected to remain stable as the offtake by farmers remain more or less uniform , given fixed and low retail price.

----- Indiainfoline (Edited).