Govt to cut fertiliser subsidy

The government today said that fertiliser subsidy is expected to decline by around Rs 19,000 crore from Rs 1,19,000 crore this fiscal due to sharp fall in prices of the nutrient in the international market. “Fertiliser subsidy for the current fiscal was initially estimated at Rs 1,19,000 crore.

We now expect it to come down to about Rs 1,00,000 crore,” Fertiliser Minister Ram Vilas Paswan told reporters here today. He said the Centre has already provided Rs 87,000 crore for subsidy in the current fiscal, which is sufficient to meet the fertiliser companies’ requirement till December.

Paswan assured that “the UPA government is committed and whatever will be the subsidy burden, will be paid”. He said the subsidy would be provided in cash. The minister noted that prices of imported fertilisers have slumped and had the rupee not depreciated, the subsidy would have fallen significantly.

“The urea price in the global market has declined to $255 from $860 in July, while DAP price has come down to $850 from $1,300,” Paswan said, adding rates of other inputs like sulphur, phosphoric acids and ammonia have also plunged.

India has imported 4.5 million tonnes of DAP and 3.5 million tonnes of urea till October. Out of the total subsidy, imports of DAP and MOP fertilisers account for the maximum share.

Asked about gas availability, he said that the fertiliser units need 41 mmscmd for the existing gas-based plants, while 95 mmscmd would be required taking into account expansion, revival of closed units and conversion of naphtha-based plants into gas-based ones. Currently, the sector gets 29 mmscmd.

Paswan said the government has taken a decision to give priority to the fertiliser sector in gas allocation and it is expected that “by 2011-12, requirement of gas would be met”.