Govt to limit subsidy if private cos don't slash prices of non-urea fertilisers

Government Tuesday warned that it will restrict or stop giving subsidy to private companies if they fail to bring down retail prices of non-urea fertilisers by up to Rs 5,000 per tonne, in line with public sector firms.

Last month, the Centre had announced a cut in maximum retail price (MRP) of di-ammonium phosphate (DAP) by Rs 2,500 to Rs 22,000 per tonne, muriate of potash (MoP) by Rs 5,000 to Rs 11,000 per tonne and NPK nutrients by Rs 1,000 per tonne.

"In cases, where after scrutiny, unreasonableness of MRP is established or where no correlation is found between the cost of production or acquisition and the MRP printed on the bags, the subsidy may be restricted or denied even if the product is otherwise eligible for subsidy under Nutrient Based Subsidy," Fertiliser Minister Ananth Kumar said in the Lok Sabha.

The government will "take necessary action" in proven cases of abuse of subsidy mechanism, he said in a written reply to the Lower House.

Stating that all phosphatic and potassic (P&K) importers and manufacturers have confirmed in writing that they have cut the prices, Kumar said the Centre has taken up the matter with the state governments to monitor and ensure farmers get the benefit of lower price of P&K fertilizer.

Retail prices of non-urea fertilisers such as DAP, MoP and NPK are decontrolled and are determined by manufacturers, while the Centre gives them fixed subsidy each year.

Replying to another query, the minister said the government has put in place a procedure to ensure the P&K fertiliser manufacturers fix MRP at a reasonable level as per the market dynamics.

State-owned Rashtriya Chemicals and Fertilizers (RCF) and National Fertilizers Ltd (NFL) and a few private companies have reduced the non-urea fertiliser rates.

Total subsidy outgo is estimated to be Rs 21,274 crore for complex fertilisers for this fiscal.

On an average, the domestic demand of DAP is 100 lakh tonnes, MoP 25 lakh tonnes and NPK fertiliser 90 lakh tonnes.