The Department of Fertilisers is likely to recommend a status quo in the rate of subsidy for complex fertilisers under nutrient based regime (NBS) for the new financial year 2015-16.
According to sources close to the development, with falling crude prices and low consumption of NPKS fertiliser (Nitrogenous, Potash, Phosphates and Sulphur), the prices of these complexes have fallen across the globe. The recommendation will be sent to the cabinet committee for finalisation.
Besides, the ensuing annual budget may announce liberalisation of pricing of urea so as to bring it under the NBS scheme from the fixed price mode.
Under NBS policy which came into being in 2010 and replaced the old concessional scheme, a fixed rate of subsidy is announced on NPKS complex nutrients by the government on an annual basis. The fertiliser manufacturers and marketers are free to fix the maximum retail price at reasonable rates under NBS.
Urea unlike other fertiliser (potash, phosphates, nitrogen etc) has a floating subsidy component whereby the government subsidy to the marketers varies with the marketing price (MRP).
At present for 2014-15, prices of major complexes like Di-ammonium Phosphates ( DAP), Muriate of Potash (MoP), Mono- ammonium phosphates ( MAP) and single super phosphate (SSP) have been fixed at 12,350 per metric tone (PMT), 12,009 PMT, 9,300 PMT and 3,173 PMT respectively.
On the other hand, per kg subsidy for these complexes fixed for the year 2014-15 is Rs 20.875 per kg for nitrogenous complexes (N), Rs 18.679 per kg for phosphates (P), Rs 15.50 per kg for potash (K) and Rs 1.67 per kg for sulphur (S).
The NBS Rates are fixed taking into account the international and domestic prices of P&K fertilisers, exchange rate, inventory levels in the country etc and based on the recommendations of IMC constituted under the NBS Policy.
Meanwhile, official sources aid, the falling crude prices has an impact on overall fuel prices and thus it is conducive for bringing urea under NBS which is a long standing recommendation for rationalisation of the subsidy.
They explained that one of the reasons for bringing urea under NBS is the overuse of urea among the farmers which is degrading the quality of the soil.
In fact, in the presentation on ensuing Rabi season, the secretary of fettiliser raised serious concern on imbalanced use of fertilisers and continuously increasing ratio in the sale of urea as compared to potassium& phosphate.
Besides imbalance in fertiliser use, depleting soil organic matter, emerging multi-nutrient deficiencies, negative soil nutrient balance and declining nutrient use efficiency & crop response ratio are the major concerns in Indian agriculture.
The fertiliser subsidy paid to the companies has declined by about 41% to Rs 21,300 crore during the April-July 2014 as against Rs 36,000 crore paid in the corresponding period the previous financial year.
The government had increased the total fertiliser subsidy in the July budget at Rs 72,970.30 crore for the entire 2014-15 fiscal from Rs 67,970 crore proposed in the Interim Budget. India imports P&K fertilisers in the absence of much raw material to produce these fertilisers.
The Economic Survey 2013-14 pointed out that the government and farmers are together ‘wastefully’ spending over Rs 8,500 crore on urea, as it is highly subsidised soil nutrient and therefore used instead of P&K fertilisers.