Fertiliser subsidy bill may rise

Rising fertiliser costs are likely to bloat the Centre's fertiliser subsidy bill in the current fiscal by about Rs 800 crore. The department of fertilisers will shortly approach the finance ministry for a higher provision in the Budget.

According to fertiliser department sources, the cost of potash muriate has risen almost 45 per cent to touch $180 a tonne from $124 in the last fiscal.

Similarly, the cost per tonne of phosphoric acid has gone up over 12 per cent to $400 from $356 during 2003-04. Ammonia, used for producing urea, too witnessed an over 20 per cent increase from $180 a tonne last year to about $220 now.

The sources said the interim Budget presented by Jaswant Singh had not taken into account the rise in fertiliser prices and the impact it would have on the fertiliser subsidy bill for the year.

The Budget had provided Rs 12,662 crore towards fertiliser subsidies. While Rs 8,143.15 crore was provided towards indigenous fertilisers, Rs 473 crore was set aside for imported fertilisers and about Rs 4,000 crore for the concession on sale of decontrolled fertilisers to farmers.

The sources said Indian fertiliser companies were negotiating the prices with their foreign suppliers in early January, and hence the department could not get a fix on the exact subsidy requirement in time to be incorporated in the interim Budget.

The foreign suppliers have claimed that a rise in the production cost and higher freight expenses have pushed up the prices of potash and phosporic acid.

The sources said fertiliser companies imported about 1 million tonnes of phosporic acid, about 2-2.2 million tonnes of potash and about 700,000 tonnes of di-ammonium phosphate a year.

While indigenous production will take care of the urea requirement in the country, the entire requirement of potash is met through imports and 35-40 per cent of ammonia used for producing urea too is imported.