The Hindu Business Line : `Fertiliser sector a victim of subsidy'

THE President and Whole-time Director of Godavari Fertilisers and Chemicals Ltd (GFCL), Mr K.A. Nair, said that the fertiliser industry was a "victim of subsidy and not the culprit".

He wanted the Government to either take into account the cost structure in determining the subsidy content or route the subsidy directly to the farmers.

Addressing a press conference here on Monday, Mr Nair said the fertiliser industry per se does not need the subsidy but farmers needed the Government support. Subsidy was required because the retail prices of Indian fertilisers were way below the international prices. For instance, the international price of urea was $285 per tonne while its retail price in India was $105 per tonne. Similarly, the retail price of DAP in the country was $215 per tonne while its international price stood at $283 per tonne.

Denying that he was advocating complete decontrol of the fertiliser industry, Mr Nair explained that subsidy disbursement by the Government was slow and delayed in many cases. As budgetary allocations were lower than the requirement, payments were delayed.

In some States, subsidy payments were outstanding since 1998. This would affect the industry's ability to deliver the product in time. In fact, GFCL had stopped selling its products in some of these States.

This apart, he said, the international price of ammonia had increased from $168 per tonne to $317 per tonne between April and September this year. The price of phosphoric acid had also increased by 13 per cent. Yet there had been a shortfall in the supply of phosphoric acid.

Despite having strategic tie-ups with Fosker of South Africa and GTCL of Tunisia, Mr Nair said, there had been a 20 per cent shortfall in the supply of phosphoric acid to GFCL. In the case of other companies, the shortage of supply was as much as 40 per cent. Consequently, there had been a shortfall in the planned production of fertilisers. The DAP production in the country was only 76 per cent of what was planned till September end. During this year's Kharif season, he said, this shortfall in production did not have a significant impact on agricultural operations, as there had been an opening stock of 2.7 lakh tonnes while an additional 5-lakh tonnes was imported. Besides, there had been a depressed demand for DAP during the season. However, during the current Rabi season Mr Nair envisages tight supply of fertilisers in the country, particularly in the States of Madhya Pradesh and Uttar Pradesh.

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