Govt mulling over fixing nutrient-based subsidy rate for urea: Sources

Government is mulling over fixing a nutrient-based subsidy (NBS) rate for urea in order to promote balanced use of the fertiliser and bring in efficiency in the industry, according to sources.

In 2010, the government had launched the NBS programme under which a fixed amount of subsidy, decided on an annual basis, is provided on each grade of subsidised phosphatic and potassic (P&K) fertilizers, except for urea, based on the nutrient content present in them.

"We have already introduced the NBS in case of P&K fertilisers. But in case of urea, because of implementation concerns, it had not been implemented so far. The new government may consider to implement it," a highly placed source told PTI.

The fertiliser ministry is thinking on fixing a NBS rate for urea also. "The modalities are under discussion," the source added.

They said, that fixing NBS rate for urea will encourage balanced use of urea and bring in efficiency in the fertiliser industry by infusing bit of competition.

Currently, urea is the only controlled fertilizer and is sold at a statutory notified uniform sale price. Its maximum retail price is fixed at Rs 5,360 per tonne. It is the most commonly used fertiliser because it is highly subsidised.

According to sources, the NBS rate for urea had not been fixed so far because of certain apprehensions, which the current officials in the ministry feel can be resolved easily.

"The NBS can be fixed without removing urea from the Fertiliser Control order. Within the broad control parameters, you can have the flexibility to adjust to the market situation. It is possible to fix a NBS rate for urea," they said.

On concern that urea prices will go up if it is decontrolled like P&K fertilisers, sources said, in that case, the government will not completely decontrol and will keep the price band within a range depending upon the market situation. The price band can be revised periodically.

On apprehension that cheaper urea imports may hit domestic PSUs, sources said, this can be addressed by retaining the channelised imports by keeping control over quantity of shipments to ensure that cheaper soil nutrient is not dumped in the country.

On concern about easy availability of urea across the country, sources said this can be addressed by retaining movement control under the essential commodities act.

"In P&K, we have retained 20 per cent of movement control. Here we can have 40 per cent movement control," they said.

India had manufactured 240 lakh tonnes of urea during 2018-19 fiscal and imported 69 lakh tonnes to meet the domestic requirement.