The queue outside a fertiliser shop in Punjab in November tells you more about Indian agriculture than any Budget speech. Rabi sowing is under way, wheat and mustard are going into the ground, and every farmer in line is doing the same mental maths: how much DAP, how much urea, and what it will cost this year. On Wednesday, the Union Cabinet gave them an answer, and it was a generous one. The government has cleared a Rs 62,370 crore fertiliser subsidy for the Rabi 2026-27 season, a package 64% bigger than last year’s, with the price of a 50-kg bag of DAP frozen at Rs 1,350.
What the Cabinet actually approved
The decision came at the Cabinet meeting chaired by Prime Minister Narendra Modi on November 11, and was announced by Information and Broadcasting Minister Ashwini Vaishnaw. The money covers phosphatic and potassic fertilisers, the P&K grades that include DAP and the NPKS blends, for the six months from October 1, 2026 to March 31, 2027, according to the Press Information Bureau.
The headline figure is Rs 62,370.02 crore. Last Rabi season, the same exercise cost Rs 37,952.29 crore. The gap between the two, Rs 24,417.73 crore, is the measure of how much global fertiliser prices have moved in a year. The Cabinet did not just approve a bigger cheque. It raised the per-kilo subsidy rates for every nutrient the scheme covers, up 64% on last season overall.
Nitrogen now attracts Rs 94.21 per kg, up nearly 119% from last Rabi, according to Business Standard. Phosphorus is set at Rs 66.11 per kg and potash at Rs 2.38 per kg. The sharpest jump is sulphur, where the rate has risen from Rs 2.87 to Rs 10.42 per kg, an increase of more than 260%.
How the fertiliser subsidy actually works
Here is the part that confuses people. The subsidy does not go to the farmer. It goes to the fertiliser company, which sells 28 grades of P&K fertilisers at prices the government controls. The farmer’s benefit is indirect but real: the bag costs less than it would on the open market.
That is why the DAP price matters more than the subsidy number. A 50-kg bag of DAP will continue to sell at Rs 1,350, the government said, even though the international price of DAP and its inputs has climbed through the year. For a wheat farmer buying several bags before sowing, that frozen price is worth more than any announcement in Delhi.
The scheme itself is old. The Nutrient Based Subsidy regime has run since April 1, 2010, and it fixes the subsidy per kilo of nutrient, nitrogen, phosphorus, potash and sulphur, rather than per bag of product. Urea sits outside it entirely, on a separate track, which is one reason the fertiliser debate in India never quite ends.
Why the bill jumped so much
The Cabinet’s own explanation is straightforward: international prices. The government pointed to recent trends in the prices of urea, DAP, muriate of potash and sulphur, all of which have stayed elevated through a year of geopolitical tension, according to the Economic Times.
Business Standard adds a wrinkle worth noting. The Rabi outlay, combined with the Rs 41,534 crore already announced for Kharif 2026-27, takes the total nutrient subsidy for this financial year to around Rs 1.04 lakh crore. That is 92% above the Rs 54,000 crore the Budget had set aside for it. In other words, the government has already spent nearly double what it planned on the fertiliser subsidy, and the year is not over.
That is not a criticism, exactly. A subsidy that fails to keep fertiliser affordable during sowing season is worse than an expensive one. But it does mean the fertiliser bill is now one of the largest unplanned items in the Budget, and the Finance Ministry will be watching the next round of global prices very closely.
The rest of the Rs 77,101 crore package
The fertiliser decision was the largest of five approvals the Cabinet cleared on Wednesday, worth Rs 77,101 crore between them, according to Outlook India. The others included an 8.45-km extension of the Noida Metro’s Aqua Line to Greater Noida West and a Rs 3,230 crore national museum, the Yuge Yugeen Bharat museum, in Delhi’s North and South Blocks. The same meeting also extended the Stand-Up India scheme till 2031, backing loans for first-time entrepreneurs, and continued two credit guarantee funds for five more years.
Read together, the package has a clear shape. The government is spending to keep farm inputs cheap, to keep credit flowing to small borrowers, and to build infrastructure in the National Capital Region. It is a pre-Budget statement of priorities as much as a set of decisions, and it lands in the same week that Moody’s lifted India’s growth forecast to 7% for FY27.
So the test is not the announcement. Announcements are cheap, and this one was expected. The test is the shop counter in December, when a farmer walks in and asks for DAP. If the bag is there, and if it costs Rs 1,350, the Rs 62,370 crore will have done its job. If it is not there, no subsidy figure will explain it away. Watch the shelves, not the press releases.