Govt notifies P&K fertiliser subsidy rates

The government has notified the subsidy rates for phosphatic and potassic (P&K) fertilisers for the current fiscal, which are lower than the last year.
For this fiscal, the subsidy on nitrogen (N) is fixed at Rs 15.85 per kg, Rs 13.24 per kg for phosphorous (P), Rs 15.47 per kg potash (K) and Rs 2.04 per kg for sulphur (S), according to the notification issued by the Department of Fertiliser (DoF).
Last month, the Cabinet Committee on Economic Affairs (CCEA) had fixed the nutrient-based subsidy rates (NBS) for P&K fertilisers for 2016-17, taking into account decreasing trend in global prices of finished fertlisers and raw materials.

In the previous fiscal, the subsidy on nitrogen (N) is Rs 20.88 per kg, phosphorous (P) Rs 18.68 per kg, potash (K) Rs 15.50 per kg and sulphur (S) Rs 1.68 per kg.
The total subsidy for the year 2016-17 is pegged at about Rs 21,274 crore.
The subsidy on nitrogen and phosphorous has been reduced by about Rs 5 per kg, while a marginal cut has been made on potash. This could lead to a saving of about Rs 5,000 crore to the exchequer.

The subsidy on Di-ammonium Phosphate (DAP) has come down to Rs 8,945 per tonne from Rs 12,350 per tonne in the current fiscal. Subsidy on Muriate of Potash (MoP) has reduced to Rs 9,280 per tonne from Rs 9,300 in 2015-16, the notification said.

The fertiliser companies are required to print Maximum Retail Price (MRP) along with applicable subsidy on the fertilizer bags clearly. Any sale above the printed MRP will be punishable under the EC Act.
"In order to examine the reasonableness of MRPs of P&K fertilisers, the companies shall continue to submit the certified cost data as per the requirement and directions of DOF from time to time. The companies shall also report MRPs of P&K fertilisers regularly to DOF," the notification added.
The government has been implementing NBS policy for decontrolled P&K fertlisers since April 2010.
Under this policy, the subsidy on P&K fertilisers is announced annually for each nutrient i.E. Nitrogen, Phosphorous, Potash and Sulphur on per kg basis which is converted into subsidy per tonne depending upon the nutrient content in each grade of the fertilisers.

These rates are determined taking into account global and domestic prices of P&K fertilisers, exchange rate, inventory level in the country etc.
While the government announces fixed subsidy on NPK fertiliser, the manufacturers are free to decide the maximum selling price on these complex fertilisers.