India’s fertiliser subsidy allocation moderates in FY27 but remains structurally high. The Department of Fertilisers has been allocated a net ₹1.71 lakh crore for 2026–27, marking an 8.4% decline from the FY26 Budget Estimate of ₹1.87 lakh crore, reflecting easing global input prices and lower import dependence. However, the outlay is still nearly 10% higher than the FY26 Revised Estimate, underscoring persistent fiscal pressure from farm input subsidies.
Urea subsidies continue to dominate expenditure. Support for indigenous urea production is budgeted at ₹91,000 crore in FY27, broadly stable compared to ₹89,990 crore in FY26 BE. In contrast, subsidies for imported urea fall sharply to about ₹32,000 crore from ₹51,972 crore in FY26 BE — a year-on-year contraction of nearly 38% — signalling improved domestic availability and softer international prices.
Allocations under the Nutrient Based Subsidy (NBS) scheme for phosphatic and potassic fertilisers stand at ₹54,000 crore, down 10% from ₹60,000 crore in FY26 BE but higher than FY26 RE levels. This suggests continued exposure to volatility in global phosphate and potash markets, even as the government seeks to promote balanced nutrient use.
From a fiscal lens, fertiliser subsidies still account for over 6% of total central government revenue expenditure, limiting room for sharper consolidation. For fertiliser manufacturers, the budget reinforces policy continuity and demand visibility, but also highlights ongoing dependence on state support amid constrained pricing flexibility.