Fertilizer majors hail new subsidy policy

Fertilizer producing companies have hailed the decision of the Manmohan Singh Government to introduce nutrient-based subsidy, stating that it will help attract more investment in the sector.

“Apart from reducing the fertilizer subsidy burden of the government, this move will help rejuvenate the soil, thereby increasing farm productivity on a sustainable basis so as to ensure food security for the nation,” IFFCO Managing Director U. S. Awasthi said.

Mr. Awasthi said the new policy would help in bringing the much-needed relief to farmers and the fertilizer sector and assist in improving the soil health through balanced and integrated use of nutrients, including secondary and micro nutrients. “The new fertilizer policy will also attract investment in the sector, which has been almost stagnant over a decade. This will facilitate timely availability of fertilizer to farmers and will reduce imports,” he added.

Rashtriya Chemicals and Fertilizers Chairman and Managing Director U. S. Jha also welcomed the move, but said that there would not be any improvement in margins for the company.

“The prices of phosphorus and potassium-based fertilizers are not expected to be de-controlled immediately,” he said.

Credit rating major Fitch Ratings India Pvt. Ltd. (FRIPL) was of the view that the proposed nutrient-based fertilizer subsidy scheme could result in an increase in farm-gate prices of fertilizers. In its 2010 series outlook report on the fertilizer sector, Fitch feels that the proposed scheme would subject the retail process to market forces including global commodity prices.

It said the scheme could also significantly alter the earnings potential and credit profiles of fertilizer manufacturers but admits that the shift from cost-plus and import price-parity driven subsidy scheme to nutrient-based one would reduce the financial burden of the government.

The Centre has announced nutrient based subsidy (NBS) scheme, which will come into effect from April 1. It has decided to raise the retail price of urea by 10 per cent and allow manufacturers to fix the rates of DAP and MOP fertilizers. At present, the maximum retail price (MRP) of urea is Rs. 483 a quintal, while DAP costs Rs. 935 a quintal and MOP Rs. 445.50 a quintal.

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Printable version | Sep 20, 2021 3:04:35 AM |

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