The Hindu Business Line : Nutrient-based fertiliser subsidy scheme cleared

New Delhi, June 12 Farmers may see prices of complex fertilisers coming down by an average of 17.5 per cent. This follows the approval given for a ‘nutrient-based’ subsidy-cum-pricing policy by the Cabinet Committee on Economic Affairs (CCEA) here on Thursday.

Currently, subsidies on fertilisers are entirely ‘product-based’. They are available only for specific products such as urea, di-ammonium phosphate (DAP), muriate of potash (MoP) and Single Super Phosphate (SSP). Others fertilisers receive no subsidy or have prices that are fixed with no regard to their nutrient content.

This will, however, now change. For example, the farm-gate price of urea (which contains 46 per cent nitrogen) is currently Rs 4,830 a tonne, which works out to Rs 10.5a kg of nitrogen. “We will now use the Rs 10.5 a kg rate of nitrogen as the benchmark for determining the prices and subsidies payable on all other fertilisers containing nitrogen. This will induce farmers to use complexes that may have lower nitrogen, but are priced out by urea despite being more suitable for particular crops and soils,” said Dr J.S. Sharma, Secretary, Department of Fertilisers. Likewise, the phosphorous content of 46 per cent in DAP, 60 per cent potassium in MoP and 11 per cent sulphur in SSP will be used as the benchmarks for arriving at the equivalent nutrient-linked prices for all other fertilisers.

“We expect average retail prices of complex fertilisers to come down from the present Rs 8,058 to Rs 6,643 a tonne,” Dr Sharma told Business Line. The additional subsidy burden on this count – the difference between the lower farm-gate price and the higher cost of production or imports borne by the industry – will be around Rs 1,059 crore.

The new pricing scheme and the rates applicable on various complexes are expected to be notified in a week’s time.