Industry & Economy
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Fertilisers
Allocation for fertiliser subsidy may be raised
Ambarish Mukherjee
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The Government is also examining the possibility of reworking the price fixation policy for single super phosphate.
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New Delhi
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Feb. 25
THE Government is likely to increase the Budget allocation on fertiliser subsidy for the coming fiscal by around Rs 3,000 crore, taking the total subsidy for 2005-06 close to Rs 16,000 crore. The decision to increase the allocation was due to this year's fund crisis that led to poor availability of necessary fertilisers in various States.
The fertiliser subsidy for this fiscal was Rs 12,662 crore, but the actual figure is now being estimated to be more than Rs 17,000 crore, official sources said.
This year prices of raw materials of all types of fertilisers have increased significantly. And since the Union Government failed to release necessary funds to the fertiliser manufacturers, the companies reduced production. As a result, availability of urea, di-ammonium phosphate (DAP), single super phosphate (SSP), muriate of potash (MoP) were low in majority of the States.
Along with increasing the total subsidy to be payable to the industry, the Government is also considering a substantial rise in the rate of subsidy for single super phosphate.
According to Ministry officials, the current subsidy paid to SSP manufacturers is Rs 650 per tonne. This may be doubled and could be linked to the cost of rock phosphate. Subsidy rate for SSP had remained fixed since 2002, while for other fertilisers the rates were hiked last year.
The Government officials admitted that during the past three years, the cost of imported rock phosphate has increased from around $45 (Rs 1,900) per tonne to around $60 (Rs 2,500) per tonne, while that of sulphuric acid has gone up from around Rs 1,200 per tonne to around Rs 2,200 per tonne. These two are the inputs for making SSP.
The Government is also examining the possibility of reworking the price fixation policy for SSP. SSP is the only fertiliser for which the selling price is fixed by the State governments, while the concessions or subsidies are determined by the Union Government. The Ministry is of the opinion that the selling price should be decided by the Union Government and not the respective State governments.
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