Government today reduced potash subsidy by Rs 3.33 per kg for 2014-15 financial year resulting in saving of Rs 900 crore to the exchequer, but said the move would not lead to increase in retail prices.
The Cabinet Committee on Economic Affairs (CCEA) today approved subsidy of P&K (Phosphatic and Potassic) fertilisers for next fiscal wherein it has recommended constant subsidy rates for all the complex fertilisers, barring potash.
"Cabinet has decided to reduce subsidy on potash taking into consideration the fall in international prices. Consequently, this will not put 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 told PTI.
The Fertiliser Ministry had taken approval of the Election Commission to move this proposal before the Cabinet.
The secretary said 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 to meet domestic demand.
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 CCEA kept the subsidy on other major complex fertiliser phosphate at last year's level as the global prices were stable.
Commenting on the development, P S Gahlaut, Managing Director of Indian Potash Ltd (IPL), which imports fertiliser on behalf of the government, said: "The Decision to decrease subsidy on potash is appropriate as potash prices in the international market has come down."
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.
