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Rating agency CRISIL Ratings has said that the government's fertilizer subsidy bill could increase by Rs 40,000 crore this financial year from the already-announced allocation of Rs 2.15 lakh crore because of the continued surge in the prices of the key raw material -- natural gas -- for manufacturing urea. The agency said any delay in increased allocation and disbursement would lead to higher working capital requirements and moderate the credit metrics of fertiliser makers.

CRISIL Ratings’ Director -- Naveen Vaidyanathan said the price of imported urea, which accounts for the balance 15 per cent volume, remains elevated at over USD 650 per metric tonne, almost double the historical levels. Together, this could mean overall subsidies rising to Rs 2.55 lakh crore this fiscal. 

Besides, agency mentioned the government has been proactive in addressing the subsidy requirements of the industry. In addition to Rs 1.05 lakh crore approved in the Union Budget for this fiscal, an additional subsidy of Rs 1.10 lakh crore was announced in May 2022 to offset surging feedstock and product prices.