Govt may slash subsidy on DAP, potash fertilisers

Govt may slash subsidy on DAP, potash fertilisers

The government may substantially slash the subsidy it offers on non-urea fertilisers like di-ammonium phosphate (DAP) and muriate of potash (MoP).

Retail prices of phosphatic and potassium fertilisers like DAP and MoP were freed from the government control in April 2010, but the government continues to offer subsidy to keep the prices down.

"There is a strong case for subsidy reduction on non-urea fertilisers because their retail prices have shot up and global rates are also expected to decline," a senior government official said.

The subsidy is benchmarked against the global prices. So, if international rates are coming down, subsidy too have to be cut, the official said.

The Fertiliser Ministry is considering to cut subsidy on DAP by Rs 4,500 per tonne and on MoP by Rs 1,054 per tonne, that could be effective for the 2012-13 fiscal, the official said.

The government gives a subsidy of Rs 19,763 per tonne on DAP and Rs 16,054 a tonne on MoP. India imports almost half of its requirement of DAP and almost entire requirement of MoP.

The final decision on this issue would be firmed up in the inter-ministerial meeting to be held on January 17.

The official further said the government will also make the existing retail prices of these fertilisers as the benchmark to formulate subsidy levels.

Retail price of DAP is ruling at around Rs 20,000 per tonne and MOP is available at Rs 12,000 per tonne.