Posts tagged ‘Urea Subsidy’

Agriculture in India – Economic Perspective


I was just going through the agrarian part of Indian economics which  helped me gather some important updates on farming. Agriculture employs approximately 60% of India’s population but contributes only ~19% to GDP.  Hence whenever rainfall is good or above average consumption companies, gold, etc rises as income of farmers is assumed to increase.

As we have a calendar year which starts Jan and ends in Dec, Financial year which starts in March and ends in April, We also have agricultural year which starts in July and ends in June. July-Sept is a period when kharif crops which consume high quantum of water are sown and harvested. Oct-March is a period when rabi crops are sown and harvested.  Period from Apr-June is known as summer season in which very few crops are harvested comparatively.

Few Kharif Crops : Bajra, Maize, Jowar, Mung Bean, Rice, Urad, Guar, Groundnut, Sugar Cane, etc

Few Rabi Crops : Wheat, Gram, Linseed, Mustered, pea, barley, Oilseed.

Summer Crops : Rice, Mainz, Groundnut, etc

Rainfall Dependency

If rains are inadequate in a country like India where substantial part of land depends on rain water then it probably hurts not only the farmers with low income but consumers with high inflation. Every week economist eye total hectares of land utilized for agriculture purposes. The number have been going down in a gradual manner. Total agricultural land in India in 2008-09 was 182.385 million hectare against 185.142 million hectare in 1988-89, a fall by 2.76 million hectare. Monthly rainfall numbers should be also eyed. After reading few articles I understand that heavy and scanty rainfall in the month of July may affect the sowing of Kharif crops. Also Farmers wish to see some drops pouring in during end of kharif crops which help them in better harvesting and sowing better rabi crop.


I read some notes on fertilizers. May be inaccurate but what I understood is output from a farmland is deemed to be more favorable when fertilizers are poured in a ratio. Fertilizers used by farmers majorly are Urea, phosphatic and potassic fertilizers. Price of Urea per tone is near to Rs.5300 whereas price of other fertilizers is ~ near to 20000-25000. Fact of the matter being govt. offers 75% subsidy on Urea hence usage of urea has increased to a great extent thereby not only affecting the crop and sand for future use but also hampering Govt. finances as every tonne of Urea adds to govt. expense. Recently released report by Mr. Kelkar and Panel also suggested reducing the difference i.e. increasing Urea prices. Since Govt. is providing Urea at throw away prices to farmers there have been smuggling to Pakistan and other neighboring countries where the cost of the same products is 2-3times higher. Just to add Indian economy faces fertilizer subsidy burden of ~60-75k crores per financial year.

Will add updates if any. Appreciate your inputs…

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