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Govt approves subsidy cut on fertilisers for FY13

Press Trust of India  |  New Delhi 

The government today decided to bring down the quantum of on decontrolled fertilisers — phosphatic (P) and potassic (K) — for the 2012-13 fiscal.

The Cabinet Committee on Economic Affairs (CCEA) approved the Fertiliser Ministry's proposal to reduce on P and K fertilisers under the Nutrient Based (NBS) policy, sources said.

Due to the strengthening of the rupee and bearish global price, the Fertiliser Ministry had recommended reduction in subsidy on nitrogen (N) and potassium (K), which will be Rs 24 per kg each and Rs 21.8 per kg on phosphate (P) for the 2012-13 fiscal.

For the 2011-12 fiscal, subsidy of N, P and K has been fixed at Rs 27.15 per kg, Rs 32.33 per kg and Rs 26.76 per kg, respectively, under the Nutrient Based Subsidy (NBS) policy.

The new rates will be effective from April 1.

"The reduction in P and K fertilisers are expected to bring down its total subsidy bill by 20 per cent in the next fiscal," a senior government official said.

The subsidy bill of P and K fertilisers alone is seen to touch Rs 52,000 crore this fiscal, the official said.

Under the NBS regime introduced from April 1, 2010, retail prices of 22 varieties of P&K fertilisers are freed.

The government fixes subsidy on nutrients like N, P and K, which is linked to the import parity price of fertilisers, di-ammonium phosphate (DAP) and (MoP).

Subsidy is reimbursed to fertiliser firms for selling the indigenous or imported crop nutrients at lower price to farmers.

First Published: Thu, March 01 2012. 12:39 IST