Fertiliser prices to stay intact

No changes are expected in fertiliser prices, save for some finetuning, as a consequence of a decision taken on the recommendations of the YK Alagh committee on urea pricing.

A Planning Commisson official said this was because of the need to allow more fertiliser units to shift to natural gas and liquefied natural gas.

The Alagh committee has recommended the formation of joint venture companies with overseas partners and doing away with the need for government clearance for selling fertiliser in the domestic market.

It has also suggested disbursal of subsidies from the department of fertilisers after actual sales by the companies, which is different from the earlier system with the number of bags produced being annually audited.

After the audit, 85 per cent of the subsidy was paid to the manufacturer and the remaining payment was made after certification from the respective state governments of the actual disbursement of the fertiliser sold.

The committee has suggested a long-term buy-back arrangement with the government on mutually-determined prices.

Other suggestions include allowing joint ventures to directly sell to farmers and claim subsidy from the government on the basis of the lowest concession rate determined by the domestic price of urea or the import parity price, whichever is lower.

In the committee's view there should be free sale to domestic complex manufacturers or for other non-agricultural use.

It has said the model may move away from canalisation by any entity depending on the following conditions: sale for agricultural use must be at the marked retail price or at a lower price, in case of such sale the importer may claim subsidy payment on the basis of the lowest concession rate and prior permission of the department of fertilisers would be needed for sale of imported urea to agriculture.