The Fertiliser Ministry has notified the Cabinet's decision to reduce potash subsidy by Rs 3.33 per kg for 2014-15 that will result in saving of Rs 900 crore but would not lead to an increase in retail prices.
The Cabinet Committee on Economic Affairs (CCEA) on March 27 this year had approved subsidy of P&K (Phosphatic and Potassic) fertilisers for the next fiscal wherein it has recommended constant subsidy rates for all the complex fertilisers, barring potash.
The government has reduced the subsidy on potash taking into consideration the fall in international prices. This will not, however, put any additional burden on farmers. Subsidy on potash will come down to Rs 15.50 per kg from Rs 18.83 per kg earlier, Fertiliser Secretary Shaktikanta Das had said.
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The Fertiliser Ministry had taken approval of the Election Commission to move this proposal before the Cabinet.
The total subsidy on fertilisers is likely to come down by Rs 900 crore per annum after cut in subsidy of potash.
Potash is normally sold in Indian markets at around Rs 16,000 per tonne, while phosphate is available at about Rs 22,500 per tonne. MoP (Muriate of Potash) is widely used by farmers apart from urea and Di-Ammonium Phosphate (DAP). MoP is largely imported.
According to industry experts, global prices of potash has fallen by about USD 60-100 per tonne to around USD 320 per tonne.
Except potash, the subsidy rates on other major complex fertiliser are notified at last year's level as the global prices were stable.
During the past one year, the total demand of both potash and phosphate was more than 10 million tonnes.
In April 2010, the government decontrolled the P&K (non-urea) fertilisers by giving freedom to the manufacturers to fix MRP (maximum retail price). The Centre offers a fixed nutrient based subsidy (NBS) on P&K nutrients to keep domestic rates lower.
However, in case of urea, the MRP is fixed at Rs 5,360 per tonne and subsidy keeps changing depending upon the production cost of domestic urea and landed cost of imported urea.
