The Union Cabinet on Thursday approved the proposal to bring down the quantum of subsidy on decontrolled fertilizers — phosphatic (P) and potassic (K) — for 2012-13.
The Cabinet Committee on Economic Affairs, headed by Prime Minister Manmohan Singh, approved the Department of Fertilizer's proposal to reduce subsidy on P&K fertilisers under the Nutrient Based Subsidy (NBS) policy. However, it is unlikely to have any adverse impact on the fertilizer prices.
Due to the strengthening of the rupee and bearish global price, The Department of Fertiliser had recommended reduction in subsidy on nitrogen (N) and potassium (K), which will be Rs.24 a kg each and Rs.21.8 a kg on phosphate (P) for 2012-13.
For 2011-12, subsidy of NPK had been fixed at Rs.27.15, Rs.32.33 and Rs.26.76 a kg, respectively, under the NBS policy. The new rates will be effective from April 1. The reduction in P&K fertilizers are expected to bring down the government's total subsidy bill by 20 per cent in the next fiscal.
The subsidy bill of P&K fertilizers alone is seen to touch Rs.52,000 crore with the overall subsidy bill touching Rs.90,000 crore this fiscal. Under the NBS regime, introduced from April 1, 2010, retail prices of 22 varieties of P&K fertilizers were freed. The government fixes subsidy on nutrients such as NPK, which is linked to the import parity price of fertilizers, di-ammonium phosphate (DAP) and muriate of potash (MoP).
The subsidy is reimbursed to fertilizer firms for selling the indigenous or imported crop nutrients at lower price to farmers. This constitutes a reduction in subsidy on DAP by Rs 4,763 a tonne and on MoP by Rs.1,554 a tonne, a reduction of 27 per cent and 10 per cent, respectively. Since India imports almost its entire supply of non-urea fertilizers, this reduction could help bring down the fertilizer subsidy bill substantially.
Fertilizers Association of India Director-General Satish Chandra said the reduction of subsidy for fertilizers would not lead to any increase in prices as the fertilizer prices in the international markets had been falling.
Keywords: fertilizer subsidy
If reducing subsidies is the motive, then the subsidies given to the wealthy in the country should go. But it is easier to tax the weak. So Govt manages to squeeze 40000 crore extra from indirect taxes, which would take the costs of living of ordinary folks higher than they can bear.
Next they want to attack the subsidies. If it wants to indeed reduce subsidies on fertilisers then it should at least put in place a system that makes organic fertilisers accessible and attractive.
Rightly said by Mr. Aashish, though the move may put additional burden on farmers, it may also encourage them to adopt methods of organic farming and thus improve soil fertility. In the short term, it may look a bit harsh but we clearly don't want a second Punjab reeling under depleted soil and polluted ground water.
In effect, this is a good move by the Government, as economy can't
sustain on subsidies for long. A way had to be carved out to cut the
subsidies and as the report says it is the right time for there will be
no effect on the farmers (in terms of prices). Moreover, in long run
fertilizers have to be avoided to maintain the fertility of the soil and
organic or mixed organic-chemical fertilizer use has to be promoted.
This step may also help to promote organic farming which is good for
farmers as well as other citizens.
increasing the price by about 98% and again decreasing by 33% is the big joke this govt is making of the farmers, it has already effected the farmers
Hope this will not adversely affect the poor farmers.
how it affect the farmers, what fun are they making out of farmers. in 2011 Jan the price of DAP was ~ 500 and by JUL it rose to 975 .
Well planned and well executed by the GOI to keep the fertilizer crocodiles under their shadow and fill their belly.
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