Union Cabinet Clears Big Subsidy Hike for Rabi Season and Extends Key Loan Schemes

The Union Cabinet approved a subsidy of Rs 62,370 crore for the rabi season on Wednesday. This amount is 64 per cent higher than last year's allocation of Rs 37,952 crore. The financial support covers phosphatic and potassic fertilisers, including di-ammonium phosphate, nitrogen, phosphorus, potash, and sulphur. These rates apply from October 1, 2026, to March 31, 2027.

Pricing And Fiscal Impact

The government announced that farmers will continue to get DAP at a fixed price of Rs 1,350 per bag. Earlier this year on February 1, the Union Budget estimated the total annual fertiliser subsidy at Rs 1.71 lakh crore, down from Rs 1.86 lakh crore in 2025-26. However, the war in West Asia started a few weeks after the budget presentation. This conflict caused global fertiliser prices to spike due to energy shocks and the closure of the Strait of Hormuz.

Spending And Sales Trends

Data from the Controller General of Accounts shows the Centre spent Rs 33,664 crore in the first half of 2026-27 on nutrient-based fertiliser subsidies, against a budget allocation of Rs 54,000 crore. Another Rs 85,586 crore went toward urea subsidies between April and September 2026, compared to a budget allocation of Rs 1.17 lakh crore. Total spending in the first half reached Rs 1.19 lakh crore, which is about 70 per cent of the full-year estimate. Meanwhile, domestic fertiliser sales dropped this year due to poor rainfall. Complex fertilisers saw the biggest sales decline of 22 per cent in the first six months, while DAP sales fell by 0.6 per cent and urea sales dropped by 4 per cent. El Nino effects could also impact crop plantings and future demand.

Loan Schemes Extended

Apart from fertilisers, the Cabinet approved the continuation of the Stand-Up India Scheme and the Credit Guarantee Fund for Micro Units for five years until March 2031. The Stand-Up India extension has a corpus of Rs 4,111 crore, while the Credit Guarantee Fund for Micro Units has Rs 5,000 crore to back loans under the Pradhan Mantri Mudra Yojana. The government stated that lenders have sanctioned more than 60.36 crore loans worth Rs 43.34 lakh crore under the Mudra scheme as of September 2026. The Stand-Up India Scheme, started in April 2016, has helped over 2.75 lakh women, Scheduled Caste, and Scheduled Tribe entrepreneurs.

Context

Fertiliser subsidies form a major part of government spending to keep farming affordable for millions of growers across the country. Global supply chain disruptions directly alter these fiscal plans because India imports a large share of its raw materials and finished nutrients. Credit support schemes like Mudra and Stand-Up India run alongside these agricultural measures to back small businesses and rural livelihoods.