Agri Business

Urea price hike likely ahead of kharif 2012

Shishir Sinha Vishwanath Kulkarni New Delhi | Updated on November 15, 2017

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Farmers may have to shell out more for urea in the forthcoming kharif season as the Government is likely to hike the prices by about 10 per cent.

Sources said the Fertiliser Ministry has moved a price revision proposal to the Cabinet Committee on Economic Affairs (CCEA), which may decide on increasing the prices in next couple of weeks.

A 10 per cent rise in urea prices would bring down the subsidy component by around Rs 1,600 crore. The Government had last revised the urea prices on April 1, 2010 from Rs 4380 a tonne to Rs 5,310 a tonne.

This proposal assumes significance after Finance Minister Mr Pranab Mukherjee talked about some hard decisions after the budget session. These hard decisions are aimed to cap the subsidy under 2 per cent of GDP in 2012-13 and 1.75 per cent over the next three years.

However, this proposal has not gone well with the Planning Commission. A senior Government official said, “The Commission has supported Nutrient Based Subsidy (NBS) in place of the modified policy under NPS, but the Department of Fertiliser and the Department of Agriculture and Cooperation do not agree with that.”

However, the Department of Fertiliser opined that the NBS should be thought of when all the non-gas urea units are converted to gas so that there is uniformity in urea sector at least on feedstock front. It is expected that all the non-gas units to get converted in next three years.

A senior official said that decontrolling urea will not be good from the farmer’s points of views.

Urea demand is estimated at around 30 million tonnes, growing at 3 per cent annually, while the domestic capacity is around 22 million tonnes. The shortfall, being met through imports, is likely to increase to 10 million tonnea by 2016-17.

The proposed hike in urea prices is broadly in line with the Government’s move to reduce fertiliser subsidies. For 2012-13, the Government has pegged the fertiliser subsidy at Rs 60,974 crore, down from Rs 67,199 crore in the previous year.

On Tuesday, Agriculture Minister, Mr Sharad Pawar told the Lok Sabha on Government’s plans to reduce fertiliser subsidies to contain the adverse impact of increased fertiliser use on soil and crops.

Stating that excess usage of urea by farmers was affecting productivity, Mr Pawar sought Parliament’s support to diver the subsidy for fertilisers to organic and balanced manure.

Tracking Mr Pawar’s statement, scrips of fertiliser companies like the National Fertiliser Ltd (NFL) and Rashtriya Chemicals and Fertilisers Ltd staged a rally on Tuesday.

>vishwa@thehindu.co.in

>shishir.s@thehindu.co.in

Published on May 15, 2012

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