India has spent Rs 70,709 crore, nearly 40% of the fertiliser subsidy allocated for the 2026-27 fiscal year, in just the first three-and-a-half months, according to a report in The Times of India. The rapid drawdown indicates the subsidy bill is set to exceed the budget estimate due to the ongoing conflict in West Asia and elevated global prices of soil nutrients.
Subsidy Spend and Budget Estimates
The government allocated a little less than Rs 1.8 lakh crore for fertiliser subsidies in 2026-27. In the first 3.5 months, the Fertiliser Department disbursed Rs 70,709 crore. Officials noted that actual subsidy spent in FY2025-26 was around Rs 2.2 lakh crore against a revised estimate of approximately Rs 1.9 lakh crore. This year, the outgo is likely to be higher, according to a government official who spoke to The Times of India.
| Metric | Value |
|---|---|
| Subsidy spent (first 3.5 months FY2026-27) | Rs 70,709 crore |
| Annual subsidy budget (FY2026-27) | ~Rs 1.8 lakh crore |
| Actual subsidy spent (FY2025-26) | ~Rs 2.2 lakh crore |
| Revised estimate (FY2025-26) | ~Rs 1.9 lakh crore |
Global Fertiliser Price Pressures
The driver of the higher subsidy is the surge in global fertiliser prices. The Times of India reported that global urea prices remained elevated at $572 per tonne last month (June 2026), 45% higher than in June 2025. However, prices were nearly 40% less than in May 2026. Despite global price fluctuations, the retail price of DAP (di-ammonium phosphate) is maintained at Rs 1,350 per 50 kg bag for farmers, and urea continues to be sold at Rs 266.50 per 45 kg bag — a price unchanged since March 2018 against global prices exceeding Rs 4,000 per bag.
Supply Chain Diversification and Domestic Production
To reduce dependence on a limited number of countries for fertiliser imports, the Fertiliser Department has taken several measures to diversify import sources. In a written reply to Rajya Sabha, the department stated it is engaging with Indian missions in various countries to identify additional suppliers and strengthen the fertiliser supply chain, with a view to ensuring timely and adequate availability of fertilisers across the country. It added that sufficient funds are available to meet the subsidy expenditure.
"Going by the trend, the subsidy outgo would be higher than the budget estimate even as we are ramping up domestic production of urea," said an official.
Implications for Commodity Markets
For commodity traders tracking agricultural inputs, India's accelerated subsidy spending signals sustained high demand for fertilisers such as urea and DAP. The 45% year-on-year increase in global urea prices underscores the supply tightness exacerbated by geopolitical tensions in West Asia. India's efforts to diversify import sources and boost domestic urea production may alter trade flows in the coming months. The fixed retail prices for farmers mean the government absorbs the full impact of international price volatility, making India's subsidy bill a key indicator of global fertiliser market conditions. Traders should watch for forthcoming import data and domestic production figures from the Fertiliser Department.
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