The Hindu Business Line : Fertiliser subsidy plan fine-tuned

New Delhi, June 26 The Centre has brought two fertilisers - triple super phosphate (TSP) and ammonium sulphate - under the concession (subsidy) scheme, fixing their maximum retail prices at Rs 7,450 and Rs 10,350 a tonne, respectively.

TSP, a cheaper substitute for di-ammonium phosphate (DAP), is expected to provide an alternative supply of phosphatic fertilisers even as it helps save on the subsidy bill.

DAP pricing

Briefing reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA), the Minister of State in the Prime Minister’s Office (PMO), Mr Prithviraj Chavan, said that the Centre had also approved a new concession scheme for DAP which would compensate domestic manufacturers on the basis of import parity price.

The pricing of phosphorous (P) in DAP, which was hitherto determined on the basis of the price of input (phosphoric acid) as negotiated by the industry, will henceforth be arrived at through a ‘normated’ price based on the delivered cost of imported/indigenous DAP.

‘Outlier’ concept

The policy also introduces an “outlier” concept for computation of final rates of concession on P& K (potassium) fertilisers.

In the event of an importer contracting at a price lower by five per cent or $30 a tonne vis-a-vis the industry average, such an ‘outlier’ concern will be entitled to 65 per cent of the difference between the higher industry average and the lower outlier price. The remaining 35 per cent share would go the Government.

“This will encourage the industry to seek long-term supplies at lower prices ,” Mr Chavan said. The overall reduction in subsidy outgo from the scheme would be Rs 1,163.79 crore.

The policy also envisages maintaining buffer stocks of 3.5 lakh tonnes of DAP and one lakh tonne of MoP.