Government on Thursday approved reduction in potash subsidy for 2014-15 fiscal, which would result in savings of Rs 900 crore to the exchequer.
After receiving Election Commission’s nod, the Fertiliser Ministry has moved a Cabinet note to fix 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.
“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.
Mr. Das added that total subsidy on fertilisers is likely to come down by Rs 900 crore per annum due to this decision.
According to Industry estimates, global prices of potash have fallen by about $60-100 per tonne to around $320 per tonne.
The subsidy on other major complex fertiliser phosphate has been kept at last year’s level as the global prices are stationary.
Potash is normally sold in Indian markets at Rs 16,000 per tonne while phosphate is available at about Rs 22,500 per tonne.
Speaking on the government’s decision, Indian Potash Ltd (IPL) Managing Director P S Gahlaut said, “Decision to decrease subsidy on potash is appropriate as potash prices in the international market has come down.”
In 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). But, it offers a fixed nutrient based subsidy (NBS) on P&K nutrients to keep domestic rates lower.
However, in 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.
