Demystifying Fertiliser and Power Subsidies in India

Broadly half of the huge supposedly agricultural subsidy on fertilisers and power, amounting to more than Rs 31,000 crore and comprising 2 per cent of GDP, is either going to industry in the case of fertilisers or is simply being stolen by non-agricultural consumers in the case of power. This paper estimates plant-specific domestic resource cost of all urea plants in the country, and aggregate measure of support for selected commodities through power subsidies. It also gives some policy options both for the centre to tackle fertiliser subsidy and to the states to minimise power subsidy