India likely to spend less on subsidising fertilisers

Bloomberg

India is likely to spend less on subsidising fertilisers as global prices fall and the government looks to narrow its budget deficit, according to people familiar with the matter.
Officials are considering slashing the fertiliser subsidy bill to 1 trillion to 1.5 trillion rupees ($18 billion) for the 2023-24 fiscal year starting April, according to the people, who asked not to be identified as they’re not authorised to speak publicly. That would be down from an estimated 2.2 trillion rupees this year, which overshot the initial budget as prices surged.
The lower fertiliser allocation will help with India’s goal of cutting its budget deficit. Food and energy costs have jumped after Russia’s invasion of Ukraine. The government’s spending on food, fertiliser and fuel is set to exceed the budget estimate by almost 70% this year. However the move could challenge efforts to rein in inflation. The government uses the fertiliser subsidy to reimburse companies for selling their products to farmers at below-market prices. If farmers have to bear higher costs, they might scale back the use of crop nutrients, putting food production at risk.
Shares of Indian fertiliserproducers extended declines on concerns about a reduction in subsidies. National Fertilizers Ltd sank as much as 10.3% in Mumbai, aRashtriya Chemicals & Fertilizers Ltd declined as much as 7.9%, while Chambal Fertilisers and Chemicals Ltd fell 6.6%.
Officials expect fertiliser costs to come down globally and domestic production to increase, said the people.