NEW DELHI: CAG has initiated an all-India performance audit of fertiliser subsidy, specifically to look into the alleged diversion of subsidised urea in at least 169 districts across a few states, including the possibility of diversion outside the country. The audit, which started in May this year, is likely to be completed by mid-2027 to be tabled by the winter session of Parliament.Govt spends more than Rs 2 lakh crore annually on the subsidised urea, and their overconsumption above the national and state average in some districts has raised concerns within govt. CAG will assess the demand and efficiency of the urea subsidy framework, which is also the terms of reference of the audit.The selected 169 districts to be assessed for alleged diversion, include 149 initially chosen by CAG based on their consumption pattern, which were above the state and national average. Twenty other districts were added later after recommendation from the Centre to examine their consumption pattern. The audit will look into the fertiliser movement mechanism, their transportation arrangements, freight subsidy and associated monitoring and control system.This integrated audit approaches a wider cooperation and participation from different govt departments, like the GST network, agriculture ministry, railways and others, who will assist the auditors in its assessment of the fertiliser control system and the efficacy of the regulators.The finance ministry recently flagged the possibility of diversion of urea based on e-way bills as it found trucks were taking detours or making multiple stops. A parliamentary panel too had flagged concerns over diversion of urea, especially in border districts.Officials said the alleged diversion of subsidised urea from some of the bordering districts in UP, Rajasthan, Punjab and Bihar has also raised doubts if they are also being smuggled out of the country. The highest 37 districts being assessed for overconsumption of urea are in UP, followed by 16 each in Bihar and Tamil Nadu, and 14 each in Punjab and Gujarat. The 20 districts that were later added for further examinations are in Karnataka, Rajasthan, MP and Maharashtra.India’s total urea consumption is estimated at around 400 LMT a year, of which more than 100 LMT are imported. Even for domestic production, it requires a huge amount of imported LPG, as the fuel constitutes 90% of the input cost of urea. Over-consumption of subsidised urea raises additional subsidy burden on the energy bill and increases our import dependence, besides adding to greenhouse gas emissions, an official said.
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“As agricultural urea is universally subsidised, substantial volumes have historically been diverted into non-agricultural sectors. Technical grade urea is a core commercial raw material in resins, glues, plywood fabrication, crockery manufacturing, cattle feed, and commercial explosives,” the official added.
