Reeling under the impact of high inflation and outcry against price rise, the UPA Government on Wednesday decided to put on hold the ‘decontrol of urea' prices and instead decided to assign the job of freeing the ‘sensitive fertilizer' to a Committee of Secretaries (CoS) to work out the issue.
Interestingly, the Union Chemical and Fertiliser Minister M. K. Alagiri, who has voiced his concern over the decontrol of urea prices in the past, did not turn up for the meeting of the Group of Ministers (GoM) chaired by Finance Minister Pranab Mukherjee.
Among others who attended the meeting included Union Agriculture Minister Sharad Pawar, Petroleum and Natural Gas Minister Murli Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
Emerging out of the meeting, Fertilizer Secretary S. Behuria said the department would form a CoS to look into nutrient-based subsidy (NBS) for urea. The GoM would now finalise a policy only after receiving the recommendations of the CoS. This is likely to push the reforms of the major fertilizer component to next fiscal.
The government, in April last, had freed potassic and phosphetic fertilizers. However, in relation to urea, including its price and movement, it is still controlled by the government. Urea constitutes almost 50 per cent of the country's fertilizer consumption.
The industry was of the view that the full benefit of the NBS initiative would accrue once urea was brought under the scheme. This would encourage entrepreneurs to invest in the sector and ensure assured supply of fertilizers. Burdened with increasing fiscal deficit and fertilizer subsidy, the Finance Ministry was also reportedly in favour of the introduction of the NBS scheme on urea.
Interestingly, the Fertiliser Ministry was not willing. It feared that decontrol would not be fair for all manufacturing units in the heterogeneous urea industry where production cost differs from one unit to the other depending on plant vintage, feedstock and the level of energy consumption. On the expected lines, given its bent of mind for going ahead with the extension of the NBS scheme on urea, the GoM refrained from discussing the price of urea, which is now fixed at Rs. 5,310 a tonne. The demand for urea was 26.6 million tonnes in 2008-09 and 28.19 million tonnes in 2009-10.
