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Nutrient-based pricing policy for subsidised fertilizers

Special Correspondent

NEW DELHI: The Centre on Thursday announced a new nutrient-based pricing policy for all subsidised fertilizers that would lead to lowering of prices of some varieties. It also approved a uniform freight subsidy for all fertilizers to ensure its adequate availability across the nation at a uniform price. It will be implemented with effect from April 1, 2008.

“The selling price of subsidised fertilizers will be determined on the basis of the nutrients contained therein. The prices of complex fertilizers (having at least two nutrients) will come down by Rs.1,416 a tonne or Rs.70 a bag,” Union Finance Minister P. Chidambaram told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA) that was chaired by Prime Minister Manmohan Singh. The Centre would issue necessary notifications in this regard within next 15 days.

The reduction in the prices of complex fertilizers is aimed at encouraging farmers to use nutrient-based fertilizers rather than depending too heavily on regular nutrients like urea and diammonium phosphate (DAP), he said, adding that this would help reduce over-dependency of farmers on a particular variety of fertilizer. However, the prices of other fertilizers like urea would remain unchanged during 2008-09. The Centre’s decision to shift to nutrient-based pricing of subsidised fertilizer was mooted by the Ministry of Chemicals and Fertilizers.

According to Mr. Chidambaram, the uniform freight subsidy scheme that is based on payment of actual freight would ensure availability of fertilizers in all parts of the country, especially in areas which are far from the production facilities and ports by reimbursing freight on actual. Currently, fertilizer companies receive a fixed amount as freight irrespective of the distance from the production centre to the sale point.

The freight subsidy will constitute of two components — rail freight and road freight. The rail freight will be paid on actual, and the road freight will be paid on a normative average district lead (average of the actual leads of block headquarters from the nearest rail rake point) and a normative per kilometre rate.

The Union Finance Minister denied that there was any shortage of fertilizer in the country. “The Ministry of Fertilizers has assured us that there is no shortage. Adequate fertilizers are available and being provided,” he added.

States should ensure that there are no movement bottlenecks, which could be cleared at local level. Chief Ministers have been sensitised about the adequate availability of fertilisers, he said.

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