The Hindu Business Line : Govt plans to decontrol fertiliser prices; may start with SSP

WITH barely four months left for the UPA Government to formulate a new policy for the fertiliser industry, a proposal for phased decontrol of retail prices of fertiliser is being considered by the Government. The existing pricing system comes to an end after March 2006.

Fertiliser price being a sensitive political issue, the Government wants to make a small beginning. Officials said that the entire exercise is being done keeping in mind the various compulsions of the present coalition Government and the economic necessities.

In order to balance political and economic urgencies, the plan is to start in a small way by decontrolling the prices of complex fertilisers only, particularly single super phosphate (SSP), while leaving the main fertilisers such as urea, di-ammonium phosphate (DAP) and muriate of potash (MoP) untouched.

The choice of SSP as the starting point is because it is the only fertiliser whose selling price is not decided by the Union Government, whereas the maximum retail price (MRP) of all other fertilisers is decided by it.

The Centre also determines the subsidy given to the fertiliser producers.

For SSP, the MRP for various States is decided by the respective State governments. As a result, SSP is the only fertiliser that does not have a uniform price across the country. Based on the State Government determined prices, the Centre decides on the subsidy, which is paid from the central exchequer. The Government is in urgent need to finalise the new pricing policy (NPP) for fertilisers beyond March 2006.

The NPP, which came into effect on April 2003, was designed to encourage efficiency parameters of international standards based on the usage of the most efficient feedstock, latest technology and also ensure viable rate of return to the units.

According to the original plan, the NPP would be implemented in three stages. Stage-I would be of one-year duration, from April 2003 to March 2004; Stage-II would be of two years duration, from April 2004 to March 2006.

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