PMO wants Fertiliser Min to expedite urea decontrol policy

Amid inter-ministerial differences over the decontrol of urea prices, the Prime Minister's Office (PMO) has asked Fertiliser Ministry to expedite the proposed policy.

"The PMO has directed the Fertiliser Ministry to accelerate the urea decontrol policy," sources said.

On August 5, the Group of Ministers on Fertiliser, headed by Finance Minister Pranab Mukherjee, had referred the proposed urea decontrol policy to the Cabinet Committee on Economic Affairs (CCEA) for approval as there was strong opposition from various ministries.

In the GoM, it was agreed that views of all concerned ministries on the issue would be sent to the CCEA, which would take a final call, source said.

 

The direction from the PMO comes in the wake of delay on the part of the Fertiliser Ministry to move the Cabinet note.

According to sources, Fertiliser Minister MK Azhagiri has not yet cleared the note prepared by the Department of Fertilisers.

The minister is opposing the proposed policy contending that the decontrol of urea sector would lead to rise in prices of the important farm nutrient.

Before the GoM, Azhagiri had written to Prime Minister Manmohan Singh, opposing decontrol of the widely-used fertiliser. He had said the move should wait till amendment to the new investment policy for the sector is brought about.

Besides the fertiliser, agriculture and petroleum and natural gas ministries, the commerce ministry was also opposed to the move to free urea from price controls.

The proposal is, however, being pushed by the Finance Ministry and the Planning Commission, as they are concerned over big subsidy bill on fertiliser. In 2010-11, it was estimated at Rs 52,840 crore, almost half of which was on account of urea.

Urea is the only fertiliser that remains under full price control. The government had freed prices of phosphatic and potash fertilisers in the last fiscal.

Under the draft policy prepared by the Committee of Secretaries, a partial freeing of the retail price of urea was proposed. It also proposed that with the partial decontrol kicking in, the industry can hike prices by 10% after a year.

The agriculture ministry does not want the prices to escalate. It feels the decontrol could wait for 2-3 years, sources said. At present, MRP (maximum retail price) of urea is Rs 5,310 a tonne.

Currently, the domestic production is stagnant at 21-22 million tonne as against demand of 27-28 million tonne.