Financial Daily from THE HINDU group of publications
Wednesday, Mar 12, 2003
Government - Policy
Industry & Economy - Budget
Fertiliser price hike rolled back
NEW DELHI, March 11
BOWING to intense pressure from outside as well as from within the ruling alliance, the Finance Minister, Mr Jaswant Singh, today `rolled back' the hike in fertiliser prices proposed in his Budget. The proposal would have effected subsidy savings of about Rs 700 crore during the coming fiscal.
"I have already taken it (the price hike) back," Mr Singh said at the end of his nearly one-and-a-quarter hour reply to the debate on the 2003-04 Budget in the Lok Sabha.
The Finance Minister had earlier announced an increase in the maximum retail price of urea from Rs 4,830 to Rs 5,070 per tonne, while raising the same from Rs 9,350 to Rs 9,550 per tonne for di-ammonium phosphate (DAP) and from Rs 4,455 to Rs 4,655 per tonne for muriate of potash (MoP). Prices of other complex fertilisers, too, were increased from Rs 6,980-9,080 to Rs 7,180-9,280 per tonne.
At existing annual consumption levels - 20 million tonnes (mt) of urea, 6.5 mt of DAP and two mt of MoP - the additional burden on the farmers would have come to around Rs 650 crore on just these three major nutrients. If the increase in prices of other complex fertilisers were also factored in, the aggregate subsidy savings would have worked out to about Rs 700 crore.
While agreeing to withdraw the proposed hikes, the Finance Minister, however, urged the political establishment not to lose sight of the Centre's spiralling subsidy bill, which is budgeted to rise from Rs 41,474.43 crore in 2002-03 to Rs 48,636.25 crore in the coming fiscal. The fertiliser subsidy alone is slated to go up from Rs 11,009 crore to Rs 12,720.25 crore.
"The real problem of subsidy remains. We will all need to deal with it and find a solution," Mr Singh pointed out, while reiterating his stand that the fertiliser subsidy was not reaching the farmers and only supporting production by high-cost naphtha-based units. At the same time, he ruled out the possibility of doling out the subsidy directly to farmers on grounds that past attempts in this direction had led to confusion.
Rate cut on Central loans: The Finance Minister also announced a 100 basis points cut in rates for Central loans, from 11.5 per cent to 10.5 per cent. "The measure would go a long way in improving the finances of the States," Mr Singh said.
Along with this, loans to Central Government employees for purchase of house and computers would also be 100 basis points cheaper from the existing rates.
While not budging on the demands to roll back the cut in small saving rates, Mr Singh said that he would "revisit" the ceiling of Rs 2,000 imposed on the pension scheme to be floated by Life Insurance Corporation (LIC) for persons over 55 years of age which would assure a return of nine per cent of the lump sum premium.
He also assured the House that there would be no slippages on fiscal deficit.
"The fiscal deficit target for 2003-04 would be met," Mr Singh said. The Lok Sabha also later passed the vote on account for the first few months of the next fiscal along with the relevant appropriation bills.
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