LNG price hike likely to drive up India’s fertiliser subsidy

India relies heavily on imported liquified natural gas (LNG). Given the ongoing global gas price hike, the government’s fertiliser subsidy bill is expected to witness a hike. It is worth noting that the prices of domestic gas and imported LNG are pooled for supplying gas to urea manufactures at a uniform price. Moreover, the usage of expensive imported LNG in fertiliser production has been rising rapidly as domestic supplies are being diverted to the government’s city gas distribution network. Natural gas is the main input for urea production, and steps need to be taken so that India can reduce its vulnerability to highly volatile global gas prices.