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In a measure that would give relief to the government’s subsidy bill, the Union Cabinet today gave a nod to the Nutrient-Based Subsidy (NBS) rates for phosphatic and potassic (P&K) fertilisers for 2013-14. These are expected to cut the fertiliser subsidy by about 15 per cent in the current financial year, compared to 2012-13.
After oil and food, the fertiliser sector is the third largest contributor to the government’s subsidy bill. According to the Budget proposals, the Centre wanted to cut the subsidy bill on these three to Rs 2.21 lakh crore for 2013-14, as compared with about Rs 2.47 lakh crore during 2012-13.
The country had entered into the NBS regime on April 1, 2010. Today, the Cabinet approved per-kg NBS rates for nitrogen (N), phosphorus (P), potassic (K) and sulphur (s) for 2013-14 at Rs 2.875, Rs 1.679, Rs 1.333 and Rs 1.677, respectively. “Based on these rates, the subsidy on Di-Ammonium Phosphate (DAP) and Muriate of Potash (MOP) would be Rs 12,350 a tonne and and Rs 11,300 a tonne, respectively,” the ministry said. The pricing would be with effect from April 1.
With this, the price of DAP and MOP is expected to be reduced by a minimum of Rs 1,500 and Rs 1,000 a tonne from the current level.
The Cabinet has also decided that the reasonability of maximum retail price (MRP) of P&K fertiliser fixed by the companies in 2012-13 would be looked into for recovery of subsidy, wherever necessary. Under the NBS policy applicable to fertiliser other than urea, while the government decides a fixed subsidy on each grade covered by the policy, the importers and manufacturers decide the domestic prices of these fertilisers. They are allowed to fix the MRP at a reasonable level.
As the domestic demand for P&K fertiliser is largely met through import of finished fertilisers and the raw materials, the domestic price should normally move in line with those in the international market.
“However, in view of the recent trend of falling international prices having no corresponding decrease in domestic prices, the cabinet has decided that it shall, henceforth, be mandatory for all fertiliser companies to submit certified cost data while claiming subsidy,” the statement said. If the MRP is not found reasonable, subsidy might be restricted or denied.
