Subsidy, price controls to delay stake sale of state-run fertiliser firms

The financial condition of state-run fertiliser companies is completely dependent on subsidies and prices, which are majorly dictated by the government in India

The government is working on the price and subsidy policy of the fertiliser industry to ease the sale of stakes in state-run fertiliser companies. This may lead to a delay in the intended sale, a report in the Times of India (TOI) said. 

The financial condition of public-sector fertiliser companies is completely dependent on the subsidies and prices, which are majorly dictated by the government. The issue is more complicated as India has two subsidy regimes. One for older plants and another for newer ones. 

The country is also highly dependent on the import of raw materials for the production of fertiliser, exposing it to external disturbances. The prices have gone up due to the ongoing Russia-Ukraine war. 

The government has also hiked the subsidy on fertiliser. This year, the subsidy bill is expected to touch Rs 2.5 trillion against the budgeted amount of Rs 1 trillion, TOI added. 

On top of all this, state-run fertiliser plants are not the biggest in the country. The industry is mainly dominated by Iffco and Kribhco. The government has limited options to sell the likes of National Fertilisers and Rashtriya Chemicals and Fertilisers. 

The issue of fertiliser subsidy is also politically sensitive.

The government is holding talks at the official level to see how each matter can be resolved. However, the move will need political clearance as well.

"We have had some discussion, but nothing has been worked out yet. There needs to be clarity on how the pricing regime will play out," an official told TOI.