Cabinet likely to approve complex fertilisers price rise

The Cabinet Committee on Economic Affairs (CCEA) is likely to approve an increase in the import prices of di-ammonium phosphate (DAP) and muriate of potash (MOP), based on which the quantum of subsidy for phosphatic and potassic (P&K) fertilisers will be fixed for 2011-12. It would also take up the issue of availability of fertiliser for kharif crops.

In February, an inter-ministerial committee headed by fertiliser secretary Sutanu Behuria had proposed to raise the benchmark import prices of DAP at $612 from $580 a tonne, and MOP at $420 from $390 a tonne.

As a result, the subsidy for P&K fertilisers would also see an upward revision for 2011-12.

Besides, this would translate into a higher subsidy bill for the government. In the Budget for the current financial year, it is pegged at around Rs 50,000 crore. During 2010-11, fertiliser subsidy stood at Rs 54,977 crore.

“The subsidy under NBS (nutrient-based subsidy) needs to be revised upwards, looking at the rise in the global nutrient prices. However, this would not have much impact on the farmers. There would be only a marginal hike in the retail prices. While the international prices have gone up, the government has also levied a countervailing duty on imported fertilisers, so all these need to be factored in,” said Satish Chander, director general, Fertiliser Association of India.

The government had notified the per-kg NBS rates for 2011-12 at Rs 27.48, Rs 29.40, Rs 24.62 and Rs 1.69 for nitrogen, phosphorous, potassium and sulphur, respectively, in March based on the imported prices of urea, DAP, MOP and sulphur in that month.

The global prices of DAP are around $630 per tonne and MOP at $400-430 a tonne.