Chief Minister M. Karunanidhi on Tuesday said a political consensus needed to be evolved before taking a decision on the newly planned ‘nutrient-based subsidy’ scheme in the fertilizer sector.

In a letter to Prime Minister Manmohan Singh, UPA chairperson Sonia Gandhi and Finance Minister Pranab Mukherjee, Mr. Karunanidhi stated that the Centre was considering introduction of the scheme, under which a fixed subsidy for each product — DAP, MOP, complexes (other than urea) — based on the nutrient content would be given to the fertilizer industry.

The industry would be free to fix retail prices with effect from April 1, 2010. It was also proposed to increase the maximum retail price of urea by 10 per cent. Introduction of the scheme would definitely result in runaway increase of prices of fertilizers. There was apprehension that retail prices could even go up manifold, going by the trends in international prices of fertilizers/raw materials in the recent past, Mr. Karunanidhi pointed out.

Any spike in prices would definitely affect use of fertilizers, resulting in shortage of food grains in the country. Moreover, small and medium farmers would be worst hit as they were dependent on agriculture for their livelihood.

It would also be desirable to have views on this new scheme from select State governments with a strong agricultural background, Mr. Karunanidhi said. Already, there was a shortage of DAP and certain other complexes in Tamil Nadu and there was a need to build up stock for Kharif season. The industry had not so far contracted any quantity for Kharif season. Hence, he requested them to intervene to break the stalemate as the industry was awaiting clarity on the policy. He also suggested that any decision on introduction of the new scheme could be put on hold till an opportune time.

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