The government is likely to decide on the quantum of subsidy on decontrolled fertilisers -- phosphatic (P) and potassic (K) -- for the next fiscal, which may be less than what it would shell out in 2011-12.
The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Manmohan Singh is scheduled to meet tomorrow to deliberate on P&K fertiliser subsidy, among other issues, sources said.
As recommended by an inter-ministerial committee (IMC), the Fertiliser Ministry has proposed reduction in subsidy on nitrogen (N), phosphate (P) and potassium (K) in the wake of strengthening of rupee and bearish global price, a highly placed source said.
The IMC, headed by senior officials of fertiliser, finance and agriculture ministries, had suggested a subsidy of Rs 24 per kg each on N and K and Rs 21.8 per kg on P, which is likely to be made effective from April 1, 2012.
These rates are however lower than subsidy that the government has beeing giving for the current fiscal.
The cut in subsidy of P&K fertilisers is seen to bring down its total subsidy bill by 20 per cent in the next fiscal. The subsidy bill of P&K fertilisers alone is estimated to touch Rs 52,000 crore this fiscal, sources noted.
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.
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&K, which is linked to the import parity price of fertilisers, di-ammonium phosphate (DAP) and muriate of potash (MoP).
Subsidy is reimbursed to fertiliser firms for selling the indigenous or imported crop nutrients at lower price to farmers.
