Govt extends one-time package of Rs 3,850 cr to subsidise DAP, 2 crop insurance schemes
New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday announced a series of measures aimed at bolstering the welfare of farmers. These include a one-time subsidy package for di-ammonium phosphate (DAP) fertiliser worth up to Rs 3,850 crore and a one-year extension for two flagship crop insurance schemes.
The crop insurance schemes—Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather-Based Crop Insurance Scheme (RWBCIS)—have been extended till 2025-26 to align with the 15th Finance Commission’s period. Additionally, a separate fund of Rs 824.77 crore has been created to infuse technology into the implementation of these schemes.
The Cabinet decisions, hailed as a “New Year gift” by the Prime Minister, underscore the government’s focus on ensuring economic security for farmers and maintaining the affordability of key agricultural inputs despite global uncertainties.
The Cabinet approved the extension of an additional subsidy on DAP fertiliser beyond December 31, 2024, to ensure the retail price remains at Rs 1,350 per 50-kg bag. The financial implication of this decision is Rs 3,850 crore, which the Centre will bear.
Last year, the government introduced a one-time special package of Rs 3,500 per tonne for DAP to stabilise prices amid rising global costs. The package, valid until December 2024, has now been extended indefinitely.
Information and Broadcasting Minister Ashwini Vaishnaw confirmed that the special package on DAP will remain over and above the nutrient-based subsidy (NBS) provided under the existing scheme.
“Farmers will continue to get DAP at Rs 1,350 per bag, and the extra financial burden will be absorbed by the government,” Vaishnaw said.
The Cabinet approved enhancing the total outlay for PMFBY and RWBCIS to Rs 69,515.71 crore for 2021-22 to 2025-26, compared to Rs 66,550 crore allocated for the 2020-21 to 2024-25 period.
PMFBY, India’s largest insurance scheme in terms of policies issued, offers financial assistance to farmers for crop loss due to yield risks. RWBCIS, on the other hand, provides coverage for weather-related risks.
To further improve the schemes, the government has established a Rs 824.77 crore Fund for Innovation and Technology (FIAT). This fund will support the use of digital tools for faster crop damage assessments, quicker claim settlements, and greater coverage.
Agriculture Minister Shivraj Singh Chouhan noted, “The infusion of technology will reduce disputes and make enrolment easier for farmers, ensuring greater coverage and efficiency.”
Taking to social media platform X (formerly Twitter), PM Modi stated, “The government’s first decision of the New Year is dedicated to crores of farmer brothers and sisters of our country. Increasing the allocation for crop insurance will provide greater security to farmers’ crops and mitigate their concerns about any damage.”
He also highlighted that the extension of the DAP subsidy ensures affordable fertilisers, supporting agricultural growth despite global economic challenges.
The Cabinet’s decisions come amid ongoing farmer agitations in parts of Punjab. When asked about the protests, Vaishnaw emphasised the government’s commitment to real welfare. “Farmers have appreciated the government’s efforts to provide genuine support, as evident during the recent Haryana elections,” he added.
In addition to measures benefiting domestic agriculture, the Cabinet approved the export of 1 million tonnes of non-basmati rice to Indonesia through National Cooperative Export Ltd (NCEL). The move aims to strengthen India’s agricultural trade ties and support the global food supply chain.
The government reiterated its commitment to subsidising fertilisers despite rising global prices and geopolitical constraints.
Over the last decade (2014-24), the Centre allocated Rs 11.9 lakh crore in fertiliser subsidies, more than double the Rs 5.5 lakh crore spent in the previous decade.
The PMFBY and RWBCIS schemes cover 23 states and UTs, safeguarding farmers.
