Centre may hike urea prices by 10 %

The Centre is contemplating to hike retail prices of urea by 10 per cent. The proposal is likely to be put up before the Cabinet Committee on Economic Affairs soon for its consideration.

A panel, led by Finance Minister Pranab Mukherjee, had last year approved a new draft urea policy, which proposed partial freeing of retail prices, allowing companies to hike urea prices by 10 per cent in the first year of policy implementation.

Urea is the only fertilizer that remains under the full price control.

Its current retail price stands at Rs.5,310 a tonne and the Fertilizer Ministry wants to increase the price by 10 per cent to Rs.5,841 a tonne to bring down the subsidy burden.

Mr. Mukherjee, on Wednesday, indicated that the government could take some ‘unpopular' decisions in view of the difficult economic situation around the globe and its impact back home. In 2011-12, urea is estimated to have contributed Rs.24,500 crore to the fertilizer subsidy bill.

In fact, a Committee of Secretaries, headed by Planning Commission member Soumitra Choudhary, had proposed complete deregulation of the urea sector. However, the proposal was opposed by the finance, agriculture and fertilizer ministries.

Due to the subsidy burden, urea production has been stagnant at around 21-22 million tonnes and about 7-8 million tonnes are being imported to meet the domestic demand.

The Department of Expenditure, which has opposed freeing the urea prices totally, has supported the proposed 10 per cent hike every year for three years, provided it is rolled out with the planned changes in the New Investment Policy on urea projects.

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