The Hindu : GoM for total decontrol by 2005

Online edition of India's National Newspaper
Thursday, Oct 10, 2002

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GoM for total decontrol by 2005

By Our Special Correspondent

NEW DELHI OCT. 9. A Group of Ministers (GoM) today finalised a draft long term fertilizer policy envisaging reduction in the subsidy burden and achieving total decontrol by 2005. The politically sensitive issue of urea pricing, however, did not figure in the discussions and is expected to be taken up separately.

The GOM headed by the Planning Commission Deputy Chairman, K. C. Pant, will now place its proposals before the Cabinet on the key issues relating to fertilizer policy.

According to Mr. Pant, the GOM feels the group retention prices as recommended by the Expenditure Reforms Commission will be operationalised from April 1, 2003 under which the entire industry will be divided into six groups.

He said the average group price would be payable to those whose cost of production would be higher than the group average, while those having cost of production less than the group average would get subsidy on the basis of actual price. Besides, energy norms would be operationalised from April 2004 on the basis of the Gokak Committee report. During 2004-05, 50 per cent of the fertilizer sector would be decontrolled and the remaining 50 per cent in the following year, 2005-06.

The GOM, however, rejected the ERC proposal for setting up a fertilizer development fund as a result of the Finance Ministry's refusal to provide the initial corpus. Modernisation of old plants will thus be tackled by the industry itself.

The other members of the GOM who attended the meeting included the Chemicals and Fertilisers Minister, S. S. Dhindsa, the Petroleum Minister, Ram Naik, and the Agriculture Minister, Ajit Singh.

Informed sources said the issue of urea pricing was kept out of the purview of the policy at the behest of Mr. Pant who felt that a separate set of discussions would be needed for this purpose, given the sensitive nature of urea pricing.

As for the outlayers, where production costs are extremely high, compensation would be on the basis of 50 per cent of the average cost of the group and their cost of production.

The entire scheme is proposed to be put into operation during the next fiscal, 2003-04, and it will be evaluated by the Fertiliser Ministry after two years.

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