The Government has said no to revising the maximum retail price (MRP) of urea even as its cost price has surged by 50-80 per cent in the past year. Also, almost 40 per cent of the subsidy amount, as allocated in the current fiscal’s budget, has been exhausted in first three months.
A top government official replied in the negative when BusinessLine asked if there were any plans to revise the MRP considering high-cost prices and higher amount of subsidy outgo. A highly-placed source in the fertiliser industry said, “Cost of urea has reached nearly ₹45,000 a tonne from ₹25,000-30,000 last year. The rising price of natural gas has pushed the cost.” According to the website of the Fertiliser Department, currently, there are 32 urea units in the country out of which 30 use natural gas (using domestic gas/LNG/CBM) and the remaining two urea units use naphtha as feedstock.
Last revision in 2010
The last revision took place over 12 years ago when the then government decided to increase the MRP of urea to ₹5,310 per tonne from ₹4,830 with effect from April 1, 2010. At present, the MRP is ₹268 for a 50-kg bag of urea and ₹242 for a 45-kg bag of urea. This includes ₹354/tonne as dealer margin for private traders/PSUs/cooperatives and ₹50/tonne which is paid to retailers for acknowledging the receipt and reporting the stock in mFMS (iFMS) as additional incentive.
Urea has the maximum tonnage among all fertilisers used in the country and unlike other categories, the MRP is statutorily fixed by the Centre. The MRP is exclusive of taxes and charges towards neem coating. The difference between the delivered cost of fertilizers at the farm gate and MRP payable by the farmer is given as subsidy to the fertiliser manufacturer/importer by the government . The government pays subsidy to non-urea fertiliser makers on the basis of nutrient-based rates.
In this year’s budget, the government allocated over ₹63,000 crore as subsidy for urea and ₹42,000 crore for nutrient-based fertilisers. Data from the Controller General of Accounts show the government spent around ₹25,000 crore on urea subsidy during the first three months of the current fiscal which is around 39 per cent of budget allocation. Last year, during the same period, it paid over ₹11,400 crore which was 19 per cent of the budget allocation. The government has already doubled the fertiliser subsidy outgo for the current fiscal.
Minister of State for Chemicals & Fertilisers, Bhagwanth Khuba, in the recently-concluded monsoon session of the Parliament said 179 lakh tonnes of urea are required for the kharif season. Before the commencement of each cropping season, the Department of Agriculture and Farmers Welfare (DA&FW), in consultation with all the State Governments, assesses the State-wise & month-wise requirements of fertilisers. On the basis of the requirement projected, the Department of Fertilisers allocates adequate quantities of fertilisers to States by issuing a monthly supply plan and continuously monitors the availability.