The Hindu : Business : Centre to hike subsidy on fertilizers

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Wednesday, Feb 16, 2011
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Centre to hike subsidy on fertilizers

Special Correspondent

NEW DELHI: In a bid to cushion farmers from the impact of high global prices, the Central Government on Tuesday decided to hike the quantum of subsidy payable to fertilizer companies to ensure that the domestic prices of NPK nutrients — urea, di-ammonium phosphate (DAP) and muriate of potash (MOP) — are maintained at ‘reasonable' levels.

Rise in input costs

The decision was taken by the Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee which met here to review fertilizer prices in the wake of a global rise in input costs of fertilizer manufacturing units.

Evidently, the move to compensate producers for the higher prices of imported raw materials was deemed necessary to ward off a further inflationary impact on already high food prices.

The step has come a day after constitution of a task force headed by UIDAI Chairman Nandan Nilekani to evolve a suitable mechanism for direct payment of subsidy on kerosene, LPG and fertilizers to the intended beneficiaries. In 2009-10, the subsidy on fertilizer alone stood at over Rs.64,000 crore.

Speaking to the media after the GoM meeting, Fertiliser Secretary Sutanu Behuria said: “The subsidy level will be increased so as to maintain the affordable prices. We are working out the details…Given that global prices have risen, the MRP should be maintained at a reasonable level. The government will absorb the burden of rise in global prices by way of subsidising.”

The price difference is more in the case of import-based fertilizers.

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