Weak monsoon and Hormuz disruption could push India’s fertiliser bill towards ₹3 lakh crore
Shipping disruption in the Gulf and a weaker monsoon outlook are putting India’s fertiliser market under pressure, with subsidy costs potentially rising to ₹2.75-3 lakh crore.
India’s farm economy is facing a double shock: a weaker monsoon outlook and disruption to fertiliser flows through the Strait of Hormuz. Economic Times reports that the West Asia conflict has hit shipping routes just as the country enters the critical kharif sowing period. That timing matters because India is one of the world’s largest fertiliser users and remains heavily dependent on imported raw materials and finished products from the Gulf.
According to the report, the India Meteorological Department has maintained a monsoon forecast of 90 per cent of the long-period average, while the probability of El Niño conditions during the June-to-September season is put at 92 per cent. That raises the prospect of the weakest monsoon in more than a decade. In those conditions, any disruption in fertiliser supply becomes more than a trade issue: it turns into a direct risk for sowing, crop output and future food inflation.
The financial pressure is already mounting. Crisil Intelligence estimates cited by the newspaper show import prices for urea and DAP climbing to nearly $950 per metric tonne, with urea up about 123 per cent and DAP up 39 per cent from pre-conflict levels. Experts quoted by ET Online expect India’s fertiliser subsidy bill to reach roughly ₹2.75-3 lakh crore, far above the budgeted level of about ₹1.7 lakh crore. That implies an additional fiscal burden of around ₹1 lakh crore this year.
Logistics are an immediate concern as well. The article says shipping traffic through Hormuz has fallen sharply, putting 3-4 million tonnes of fertiliser trade per month at risk. That matters right now because India needs global tenders and deliveries in place for the kharif season. Analysts say current buffer stocks appear sufficient to avoid an immediate crisis, but they are more worried about availability for the following rabi season if the regional conflict drags on.
The story also highlights the broader macroeconomic effects. Higher fertiliser prices increase the import bill, add pressure to the rupee and could widen the fiscal deficit if the government keeps absorbing costs instead of passing them on to farmers. Economists cited in the report do not expect New Delhi to raise retail fertiliser prices, given the political and food-security sensitivity of the issue. India is therefore trying to protect farm production, contain food inflation and absorb a geopolitical shock to one of its most important agricultural input supply chains at the same time.