Fertiliser makers want Government to increase urea prices, a move that would to trim the rising subsidy bill. They want the Government to reduce the subsidy on urea and increase the same on phosphate (P) and potash (K) based complexes, the prices of which have shot up on global cues and weak rupee over the past one year.

Urea is heavily subsidised by the Government and is currently priced at Rs 5340 a tonne. The non-urea complexes like DAP and NPK are ruling at Rs 24,000 and Rs 22,000 a tonne each.

“The huge price differential has lead to the indiscriminate use of urea, resulting in imbalanced fertigation,” said A.Vellayan, Chairman, Fertiliser Association of India. The effect of such imbalanced usage comes with a lag and food production will be impacted in a year or two, Vellayan warned.

Stressing upon the need to bring in reasonable price parity between urea and P and K fertilisers, Vellayan said “By increasing the urea price, the savings in subsidy may be disbursed to P & K fertilisers for proportionate increase in subsidy of these complexes whenever required – like in case of global price rise or depreciation of rupee”.

Urea prices should be gradually increased over the next two years. A 70 per cent rise in urea prices would help the Government save annual subsidy of up to Rs 15,000 crore, Vellayan added.

“We feel urea has to be brought under the nutrient based subsidy (NBS) scheme and the imports have to be decanalised to make it more competitive,” said H.S.Bawa, Executive Vice Chairman of Zuari Industries Ltd.

(This article was published on September 20, 2012)
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