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The ongoing Russia-Ukraine conflict has caused a steep rise in global fertilizer prices, disrupting India’s supply chain due to its heavy reliance on imports. Russia, a major exporter of nitrogen, phosphorus, and potash fertilizers, has seen its supply restricted, pushing up costs for nations like India.
Govt Response: Record Fertilizer Subsidies
In response to soaring prices, the Modi government has taken decisive action to protect Indian farmers. The government allocated ₹2.25 lakh crore in fertilizer subsidies during 2022-23, ensuring that farmers did not face the full brunt of international price hikes. For 2023-24, while the planned subsidy was slightly reduced to ₹1.89 lakh crore, the revised estimates reflect the government’s commitment to providing relief.
Fiscal Impact and Trade-Offs
These large-scale subsidies, while safeguarding the agricultural sector, have had broader fiscal implications. Funds that could have supported infrastructure development, job creation, and social welfare programs have been diverted to sustain the fertilizer subsidy scheme, prioritizing immediate relief for farmers.
Diplomacy and Supply Chain Resilience
Beyond subsidies, India has strengthened its diplomatic ties with Russia to ensure a steady flow of fertilizers despite geopolitical challenges. The Modi government has increased imports from Russia, mitigating the risks posed by global supply chain disruptions.
Long-Term Strategy for Sustainable Agriculture
To address the ongoing challenges, the Indian government is focusing on long-term strategies that include boosting domestic fertilizer production, promoting sustainable agricultural practices to reduce overuse, and investing in supply chain infrastructure to reduce dependency on imports.
Conclusion
Through a mix of subsidies and diplomatic efforts, the Modi government has shielded India’s farmers from the worst effects of the global fertilizer crisis, while planning for a more self-reliant future in the sector.
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