Fertiliser Cos with Kelkar panel for revising urea prices

Say the move will help in reducing the price gap between urea and the phosphatic and potassic (P&K) fertilisers

The revision in the prices of the key crop nutrient urea as suggested by the Kelkar Committee will not only help in restoring soil mineral balance but will also reduce the government's subsidy burden, feel fertiliser companies.

Major fertiliser producers like IFFCO, Zuari, Coromandel and Tata Chemicals are of the view that an upward revision in the prices of the important nitrogenous soil nutrient is the need of the hour.

They say it will help in reducing the price gap between urea and the phosphatic and potassic (P&K) fertilisers.

The committee on roadmap for fiscal consolidation, headed by former Finance Commission Chairman Vijay Kelkar, had said "the most urgent reform required on the fertiliser subsidy front is revision in the price of urea".

 

This will not only reduce the subsidy burden but would also reduce the unsustainable imbalance in the current consumption pattern of fertilisers in the country. It is necessary from the viewpoint of long term soil quality and agricultural productivity, the report added.

Welcoming the report, India's largest farmer cooperative IFFCO's Managing Director U S Awasthi told PTI that raising urea prices will help in improving soil productivity and stop misuse.

"Presently urea is priced at about Rs 5.30 a kilo, while even the common salt is Rs 12 per kg. It is so badly under priced that the soil nutrient is being misused," he added.

Echoing similar views, Coromandel International Managing Director Kapil Mehan said, "It is a reform that is already overdue. This is a step in the right direction. We need to step up this process and merge the gap in the retail prices of urea and P&K fertilisers".

Suresh Krishnan, Managing Director of Zuari Holdings, said, "It is quite important that the price correction happens."

Krishnan said the retail price of di-ammonium phosphate and NPK fertilisers prices are around four times higher than the retail price of urea and this gap should be narrowed.

Presently the DAP price is in the range of Rs 24-25.50 per KG while that of Muriate of Potash is in the range of Rs 13-23 per kg.

Tata Chemicals Managing Director R Mukundan said, "In our view the revision in urea prices by a token amount of 10% is only the beginning."

He said this was only first of the few steps in the process to unshackle agriculture from the maze of controls and subsidy regime.

The major overhaul of subsidy regime should include the step of bringing urea under NBS, Mukundan added.

Kelkar committee has suggested adopting the formula given by the Fertiliser Ministry, which has proposed increasing the retail price of urea by 10% during the first year, with any further increase being limited to rise in the pooled gas price and in fixed cost.

"In subsequent years, regular increases in urea prices should be carried out to close the wide gap between urea and P&K fertilisers to enable efficient use of fertilisers and better agricultural productivity," the three-member committee had recommended.