Govt keeps P&K subsidy rate unchanged for H2 of this fiscal

The government today decided to keep subsidy on phosphatic and potassic (P&K) fertilisers unchanged for the second half of the current fiscal.

The decision in this regard was taken by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi.

"CCEA has approved the proposal of half-yearly review of Nutrient-Based Subsidy (NBS) rates for P&K fertilizers for the year 2016-17," an official release said.

Accordingly, in the interest of farmers, it has been decided to roll over the existing subsidy rates for another six months till the end of 2016-17 fiscal, it said.

Presently, the subsidy on nitrogen (N) is fixed at Rs 15.85 per kg, Rs 13.24 per kg for phosphorous (P), Rs 15.47 per kg for potash (K) and Rs 2.04 per kg for sulphur (S).
 

"It has also been decided to ensure that any fall in the international prices should be reflected by the fertilizers companies with subsequent reduction in maximum retail price (MRP)," the statement added.

Normally, the government has been fixing the subsidy rate of P&K fertilisers on an annual basis. However this year, it announced rate for only the first six months because of the volatility in the global prices of these soil nutrients, which are largely imported into the country.

The CCEA has approved no change in the subsidy rate as the Fertiliser Ministry has proposed that it would ask manufacturers to cut retail prices of P&K fertilisers in case of reduction in import prices.

In July, the government had asked the fertiliser companies to cut the retail prices of non-urea fertilisers by up to Rs 5,000 a tonne.

"This is expected to result in increase in consumption of P&K fertilizers which will result in balanced fertilization. As a result the yield from the crops will increase resulting in enhanced income to the farmers," the official release said.

In the previous fiscal, the subsidy on nitrogen (N) was Rs 20.88 per kg, phosphorous (P) Rs 18.68 per kg, potash (K) Rs 15.50 per kg and sulphur (S) Rs 1.68 per kg.

The government has allocated Rs 70,000 crore for total fertiliser subsidy for this fiscal, of which Rs 19,000 crore has been earmarked for decontrolled P&K fertilisers.