The Hindu Business Line : Fertiliser subsidy will continue irrespective of WTO: Paswan

THE United Progressive Alliance (UPA) Government will continue with the existing fertiliser subsidy policy and compensate the fertiliser manufacturers for the losses they have to incur for selling fertilisers at the Government administered prices.

The Minister Chemicals, Fertilisers and Steel, Mr Ram Vilas Paswan, said here on Monday.

The Government at present spends around Rs 12,500 crore annually on fertiliser subsidy account and according to available indications, this year the amount might go up. This includes all grades of fertilisers such as urea, nitrogen and phosphorous-based fertilisers and others.

"Government will not make any cut in subsidy to fertiliser companies as they are selling fertilisers to farmers at very low prices compared to cost of production. Moreover the agriculture-related subsidies are much higher in developed countries such as the UK and the US", the Minister said.

He also stated that the subsidy would continue irrespective of WTO. "First the developed countries have to remove the disparity in subsidies," Mr Paswan said.

Ministry officials told Business Line that the total quantum of fertiliser subsidy for fiscal 2004-05 might actually exceed last year's levels.

This is because of the recent high price of phosphoric acid in the international market may result in increased cost of production for di-ammonium phosphates (DAP).

To ensure proper distribution and marketing of fertilisers across the country as well as to maintain the required quality and standards, the Minister has constituted a forum consisting of all the members of Fertilizer Association of India (FAI), fertiliser manufacturers, State Agriculture Ministers and representatives of farmers and dealers from States. He said that the first meeting of the forum would be convened soon.

Addressing reporters after holding meetings with the Ministry officials, Mr Paswan said that profit-making fertiliser PSUs will not be disinvested as mentioned in the common minimum programme (CMP) of the UPA Government. But private companies are invited to restart some of the units that have been closed down, he said.

National Fertiliser Ltd (NFL) has recorded a Rs 118 crore profit during 2003-04 and Rashtriya Chemicals and Fertilisers Ltd (RCFL) has made a profit of Rs 167 crore in the same period.

On the other hand, Fertiliser and Chemicals Travancore Ltd recorded a loss of Rs 217 crore and Madras Fertiliser Ltd incurred Rs 60-crore loss during 2003-04, Mr Paswan said.

The Minister also said that three units of Hindustan Fertiliser Corporation have been closed whose revival will be considered.

"Some private party has shown interest to run Haldia unit.'' he said, adding disinvestment in these loss-making units would be the last resort for the Government.

The Minister also said that all the proposals pending with the Government for setting up of new urea plants such as Kribhco expansion project and those of bottlenecking expansion of capacity would be considered on priority basis.