FertMin moves Cabinet note, to trim potash subsidy by Rs 900cr

After receiving Election Commission's nod, the Fertiliser Ministry has moved a Cabinet note to reduce potash fertiliser subsidy for 2014-15 fiscal, which would result in savings of Rs 900 crore to the exchequer.
The Ministry has moved a proposal to fix subsidy of P&K (Phosphatic and Potassic) fertilisers for next fiscal wherein it has recommended constant subsidy rates for all the complex fertilisers, barring potash.
"The Ministry has moved a Cabinet note to keep all subsidy rates at last year's level, except of potash which has been proposed to reduced by Rs 2,000 per tonne to Rs 9,400 per tonne," a source said.

The Fertiliser ministry has taken the permission of the Election Commission to bring this proposal, sources added.
The subsidy of potash has been proposed to be reduced in view of fall in global prices by USD 100 per tonne to USD 320 per tonne.
The subsidy on other major complex fertiliser phosphate has been kept at last year's level of Rs 12,350 per tonne as the global prices are stationary.

Potash is normally sold in Indian markets at Rs 16,000 per tonne while phosphate is available at about Rs 22,500 per tonne.
Commenting on the government's decision, Indian Potash Ltd (IPL) Managing Director P S Gahlaut said, "Decision to decrease subsidy on potash is appropriate as posth prices in the international market has come down."

In the past one year, the total demand of both potash and phosphate was more than 10 million tonnes.
In April 2010, the government decontrolled the P&K (non-urea) fertilisers by giving freedom to the manufacturers to fix MRP (maximum retail price). But, it offers a fixed nutrient based subsidy (NBS) on P&K nutrients to keep domestic rates lower.
However, in urea, the MRP is fixed at Rs 5,360 per tonne and subsidy keeps changing depending upon the production cost of domestic urea and landed cost of imported urea.